Western States Paving Co. v. Department of Transportation , 407 F.3d 983 ( 2005 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
WESTERN STATES PAVING CO., INC., 
Plaintiff-Appellant,
v.
WASHINGTON STATE DEPARTMENT OF
TRANSPORTATION; CITY OF No. 03-35783
VANCOUVER, WASHINGTON; CLARK
COUNTY, WASHINGTON; DOUGLAS  D.C. No.
CV-00-05204-RBL
MACDONALD,
Defendants-Appellees, OPINION
UNITED STATES OF AMERICA; U.S.
DEPARTMENT OF TRANSPORTATION;
FEDERAL HIGHWAY ADMINISTRATION,
Defendants-Intervenors-Appellees.

Appeal from the United States District Court
for the Western District of Washington (Tacoma)
Ronald B. Leighton, District Judge, Presiding
Argued and Submitted
February 11, 2005—Seattle, Washington
Filed May 9, 2005
Before: Monroe G. McKay,* Diarmuid F. O’Scannlain, and
Carlos T. Bea, Circuit Judges.
Opinion by Judge O’Scannlain;
Partial Concurrence and Partial Dissent by Judge McKay
*The Honorable Monroe G. McKay, Senior United States Circuit Judge
for the Tenth Circuit, sitting by designation.
5005
5008 WESTERN STATES PAVING v. WSDOT
COUNSEL
Gary E. Lofland, Lofland and Associates, Yakima, Washing-
ton, argued the cause for the appellant.
Lisa J. Stark, United States Department of Justice, Washing-
ton, D.C., argued the cause for appellees United States of
America, U.S. Department of Transportation, and Federal
Highway Administration; R. Alexander Acosta, Assistant
Attorney General, Mark L. Gross, United States Department
of Justice, Washington, D.C., and Jeffrey A. Rosen, Paul M.
Geier, and Edward V.A. Kussy, United States Department of
Transportation, Washington, D.C., were on the brief.
Steve E. Dietrich, Assistant Attorney General, Olympia,
Washington, argued the cause for appellee Washington State
WESTERN STATES PAVING v. WSDOT 5009
Department of Transportation; Christine O. Gregoire, Attor-
ney General, Olympia, Washington, was on the brief.
E. Bronson Potter, Senior Deputy Prosecuting Attorney, Van-
couver, Washington, argued the cause for appellee Clark
County.
Alison J. Chinn, Assistant City Attorney, Vancouver, Wash-
ington, was on the brief for appellee City of Vancouver.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether the Transportation Equity Act for
the 21st Century, which authorizes the use of race- and sex-
based preferences in federally funded transportation contracts,
violates equal protection, either on its face or as applied by
the State of Washington.
I
Western States Paving Co. (“Western States”) is an asphalt
and paving contractor based in Vancouver, Washington. The
company is owned by a white male. In July 2000, Western
States submitted a bid for subcontracting work on the City of
Vancouver’s “NE Burton Road Project.” The project was
financed by federal transportation funds provided to the
Washington State Department of Transportation (“WSDOT”)
under the Transportation Equity Act for the 21st Century
(“TEA-21”). In order to comply with TEA-21’s minority utili-
zation requirements, the State mandated that the city obtain
14% minority participation on the project.1 The prime con-
1
Because TEA-21 does not draw any material distinctions between
racial minorities and women, the term “minority” will be used to encom-
pass both groups.
5010 WESTERN STATES PAVING v. WSDOT
tractor was bound by this requirement and rejected Western
States’ bid in favor of a higher bid from a minority-owned
firm.
In August 2000, Western States submitted a subcontracting
bid on Clark County’s “Padden Parkway (East Leg)” project,
which was substantially financed with TEA-21 funds. In dis-
tributing these funds to Clark County, the WSDOT imposed
a 14% minority utilization requirement. The prime contractor
did not select Western States, even though its bid was
$100,000 less than that of the minority-owned firm that was
selected. The prime contractor explicitly identified the con-
tract’s minority utilization requirement as the reason that it
rejected Western States’ bid.
Western States filed suit against the WSDOT, Clark
County, and the City of Vancouver in the United States Dis-
trict Court for the Western District of Washington. Western
States sought a declaratory judgment holding TEA-21’s
minority preference program to be a violation of equal protec-
tion under the Fifth and Fourteenth Amendments of the U.S.
Constitution, either on its face or as applied by the State of
Washington. Western States also requested damages under 42
U.S.C. §§ 1981, 1983, and 2000(d) and relief under Washing-
ton state law. The United States, the U.S. Department of
Transportation (“USDOT”), and the Federal Highway Admin-
istration intervened to defend TEA-21’s facial constitutional-
ity. Although the federal government took no position
regarding Western States’ as-applied challenge, it acknowl-
edged that the “state would have to have evidence of past or
current effects of discrimination to use race-conscious goals.”
Dist. Ct. Oral Argument Tr. 48.
The district court held that TEA-21’s minority preference
program is constitutional both on its face and as applied, and
granted the defendants summary judgment on that basis. In
rejecting the facial challenge, the district court determined
that Congress had identified significant evidence of discrimi-
WESTERN STATES PAVING v. WSDOT 5011
nation in the transportation contracting industry and that
TEA-21 is narrowly tailored to remedy such discrimination.
The district court rejected Western States’ as-applied chal-
lenge because it concluded that Washington’s implementation
of TEA-21 comports with the federal program’s requirements.
The court did not require Washington to demonstrate that its
minority preference program independently satisfies strict
scrutiny. The district court also held that Western States’
claims under Washington law are without merit. Western
States timely appealed.2
II
TEA-21 was enacted by Congress in 1998 and is the most
recent in a series of federal transportation statutes providing
for race- and sex-based contracting preferences.3 Pub. L. No.
105-178, 112 Stat. 107 (1998). TEA-21 was initially sched-
uled to expire on September 30, 2003, but—pending perma-
nent reauthorization—it has been temporarily renewed several
times and is now due to lapse on May 31, 2005. Surface
Transportation Extension Act of 2004, Part V, Pub. L. No.
108-310, 118 Stat. 1144.
The pertinent provision of TEA-21 provides that, “[e]xcept
to the extent that the Secretary [of Transportation] determines
otherwise, not less than 10 percent of the amounts made avail-
able for any program under titles I, III, and V of this Act shall
be expended with small business concerns owned and con-
2
Because Western States did not renew its state law arguments on
appeal, those issues are waived. See Alaska Ctr. for the Env’t v. United
States Forest Serv., 189 F.3d 851, 858 n.4 (9th Cir. 1999) (“Arguments
not raised in [an] opening brief are waived.”).
3
TEA-21 replaced the Intermodal Surface Transportation Efficiency Act
of 1991 (“ISTEA”), Pub. L. No. 102-240, § 1003(b), 105 Stat. 1914, 1919-
21. ISTEA was preceded by the Surface Transportation and Uniform
Relocation Assistance Act of 1987, Pub. L. No. 100-17, § 106(c), 101
Stat. 132, 145, and the Surface Transportation Assistance Act of 1982,
Pub. L. No. 97-424, § 105(f), 96 Stat. 2097, 2100.
5012 WESTERN STATES PAVING v. WSDOT
trolled by socially and economically disadvantaged individu-
als.” § 1101(b)(1), 112 Stat. at 113. The specifics of this
minority preference program are set forth in regulations pro-
mulgated by the USDOT. See 49 C.F.R. pt. 26 (1999).
The regulations seek “[t]o create a level playing field on
which [disadvantaged business enterprises] can compete fairly
for DOT-assisted contracts.” Id. § 26.1(b). A disadvantaged
business enterprise (“DBE”) is defined as a small business
owned and controlled by one or more individuals who are
socially and economically disadvantaged. Id. § 26.5.
Although the term “socially and economically disadvantaged”
is race- and sex-neutral on its face, the TEA-21 regulations
presume that Black Americans, Hispanic Americans, Native
Americans, Asian-Pacific Americans, Subcontinent Asian
Americans, and women are socially and economically disadvan-
taged.4 Id. § 26.67(a). This presumption of disadvantage is
4
The regulations further delineate the numerous ethnic groups that are
subsumed by each of these broad classifications:
(i) “Black Americans” . . . includes persons having origins in
any of the Black racial groups of Africa;
(ii) “Hispanic Americans” . . . includes persons of Mexican,
Puerto Rican, Cuban, Dominican, Central or South American, or
other Spanish or Portuguese culture or origin, regardless of race;
(iii) “Native Americans” . . . includes persons who are Ameri-
can Indians, Eskimos, Aleuts, or Native Hawaiians;
(iv) “Asian-Pacific Americans” . . . includes persons whose ori-
gins are from Japan, China, Taiwan, Korea, Burma (Myanmar),
Vietnam, Laos, Cambodia (Kampuchea), Thailand, Malaysia,
Indonesia, the Philippines, Brunei, Samoa, Guam, the U.S. Trust
Territories of the Pacific Islands (Republic of Palau), the Com-
monwealth of the Northern Marianas Islands, Macao, Fiji, Tonga,
Kirbati, Juvalu, Nauru, Federated States of Micronesia, or Hong
Kong;
(v) “Subcontinent Asian Americans” . . . includes persons
whose origins are from India, Pakistan, Bangladesh, Bhutan, the
Maldives Islands, Nepal or Sri Lanka . . . .
49 C.F.R. § 26.5.
WESTERN STATES PAVING v. WSDOT 5013
rebutted where the individual has a personal net worth of
more than $750,000 or a preponderance of the evidence dem-
onstrates that the individual is not in fact socially and eco-
nomically disadvantaged. Id. § 26.67(b). Firms owned and
controlled by someone who is not presumed to be disadvan-
taged (i.e., a white male) can qualify for DBE status if the
individual can demonstrate that he is in fact socially and eco-
nomically disadvantaged. Id. § 26.67(d).
The regulations do not establish a nationwide DBE pro-
gram centrally administered by the USDOT. Rather, the regu-
lations delegate to each State that accepts federal
transportation funds the responsibility for implementing a
DBE program that comports with TEA-21. The regulations
accordingly explain that the 10% DBE utilization requirement
established by the TEA-21 statute is merely “aspirational” in
nature. Id. § 26.41(b). The statutory goal “does not authorize
or require recipients to set overall or contract goals at the 10
percent level, or any other particular level, or to take any spe-
cial administrative steps if their goals are above or below 10
percent.” Id. § 26.41(c).
The TEA-21 regulations instead delineate a two-step pro-
cess that a State must follow to set a DBE utilization goal that
reflects its “determination of the level of DBE participation
[that] would [be] expect[ed] absent the effects of discrimina-
tion.” Id. § 26.45(b). In establishing this goal, a State must
first calculate the relative availability of DBEs in its local
transportation contracting industry. Id. § 26.45(c). One
acceptable means of making this determination is by dividing
the number of ready, willing, and able DBEs in a State by the
total number of ready, willing, and able firms. Id.
§ 26.45(c)(1). Under step two, a State is required to adjust this
base figure upward or downward to reflect the proven capac-
ity of DBEs to perform work (as measured by the volume of
work allocated to DBEs in recent years) and evidence of dis-
crimination against DBEs obtained from statistical disparity
studies. Id. § 26.45(d)(1). A State may also consider discrimi-
5014 WESTERN STATES PAVING v. WSDOT
nation against DBEs in the bonding and financing industries,
as well as the present effects of past discrimination. Id.
§ 26.45(d)(2)-(3). The final, adjusted figure represents the
proportion of federal transportation funding that a State must
allocate to DBEs during the forthcoming fiscal year. Id.
§ 26.45(e)(1). A State must submit its DBE program to the
USDOT for review by August 1 of each year. Id.
§ 26.45(f)(1).
The TEA-21 regulations expressly prohibit States from
apportioning their DBE utilization goal among different
minority groups (e.g., allocating 5% to Black Americans, 3%
to Hispanic Americans, 0% to Asian Americans, etc.); rather,
an undifferentiated goal that encompasses all minority groups
is required. Id. § 26.45(h). A State must meet the maximum
feasible portion of this goal through race-neutral means,5
including informational and instructional programs targeted
toward all small businesses. Id. § 26.51(a)-(b). A State must
use race-conscious contract goals to achieve any portion of its
DBE utilization requirement that cannot be attained through
these race-neutral means. Id. § 26.51(d). Even when race-
conscious measures are necessary, however, the regulations
do not require that DBE utilization goals be included in every
contract—or that they be set at the same level in every con-
tract in which they are used—as long as the overall effect is
to obtain that portion of the requisite DBE participation that
cannot be achieved through race-neutral means. Id.
§ 26.51(e)(2).
Prime contractors to whom a State awards federally funded
transportation contracts must undertake good faith efforts to
satisfy a contract’s DBE utilization goal by allocating the des-
ignated percentage of funds to DBE firms. Id. § 26.53(a).
States are prohibited from instituting rigid quotas that do not
5
The TEA-21 regulations use the term “race-neutral” to encompass
“sex-neutral,” and this convention will be followed here.
WESTERN STATES PAVING v. WSDOT 5015
account for a prime contractor’s good faith efforts to subcon-
tract work to DBEs. Id. § 26.43(a).
III
[1] “[A]ll racial classifications, imposed by whatever fed-
eral, state, or local governmental actor, must be analyzed by
a reviewing court under strict scrutiny. In other words, such
classifications are constitutional only if they are narrowly tai-
lored measures that further compelling governmental inter-
ests.” Adarand Constructors, Inc. v. Peña (“Adarand III”),
515 U.S. 200, 227 (1995).6 “The burden of justifying different
treatment by ethnicity or sex is always on the government.”
Monterey Mech. Co. v. Wilson, 125 F.3d 702, 713 (9th Cir.
1997); see also Johnson v. California, 125 S. Ct. 1141, 1146
n.1 (2005) (“We put the burden on state actors to demonstrate
that their race-based policies are justified.”); Gratz v. Bol-
linger, 539 U.S. 244, 270 (2003) (“To withstand our strict
scrutiny analysis, [the University of Michigan] must demon-
strate that [its] use of race in its current admission program
employs narrowly tailored measures that further compelling
governmental interests.” (internal quotation marks omitted)).
In addressing Western States’ facial challenge, we must there-
fore determine whether the United States has met its burden
of demonstrating that the federal statute and regulations sat-
isfy strict scrutiny’s exacting requirements. When considering
the as-applied challenge, we must decide whether the State of
Washington has met this same burden regarding its imple-
mentation of TEA-21’s DBE program.
6
Sex-based classifications must be both supported by an “exceedingly
persuasive justification” and substantially related to the achievement of
that underlying objective. United States v. Virginia, 518 U.S. 515, 524
(1996) (internal quotation marks omitted). The district court did not con-
duct a separate analysis of TEA-21’s sex-based classifications under this
standard. We likewise conclude that such an inquiry is unnecessary
because, in this case, intermediate scrutiny would not yield a different
result than that obtained under strict scrutiny’s more stringent standard.
5016 WESTERN STATES PAVING v. WSDOT
Two circuits have already considered TEA-21’s constitu-
tionality, and we will make frequent reference to these
instructive decisions. In Adarand Constructors, Inc. v. Slater
(“Adarand VII”), 228 F.3d 1147 (10th Cir. 2000), cert. dis-
missed sub nom., Adarand Constructors, Inc. v. Mineta, 534
U.S. 103 (2001), the Tenth Circuit upheld TEA-21 on its face
without considering whether it is constitutional as applied by
any particular State. In Sherbrooke Turf, Inc. v. Minnesota
Department of Transportation, 345 F.3d 964 (8th Cir. 2003),
cert. denied, 124 S. Ct. 2158 (2004), the Eighth Circuit
upheld TEA-21 on its face and as applied by the States of
Minnesota and Nebraska.
IV
We turn first to Western States’ facial challenge. “A facial
challenge to a legislative Act is, of course, the most difficult
challenge to mount successfully, since the challenger must
establish that no set of circumstances exists under which the
Act would be valid.” United States v. Salerno, 481 U.S. 739,
745 (1987).
A
[2] The federal government has a compelling interest in
ensuring that its funding is not distributed in a manner that
perpetuates the effects of either public or private discrimina-
tion within the transportation contracting industry. See City of
Richmond v. J.A. Croson Co., 488 U.S. 469, 492 (1989) (plu-
rality op. of O’Connor, J.) (“It is beyond dispute that any pub-
lic entity, state or federal, has a compelling interest in
assuring that public dollars, drawn from the tax contributions
of all citizens, do not serve to finance the evil of private preju-
dice.”); Adarand VII, 228 F.3d at 1176 (“The Constitution
does not obligate Congress to stand idly by and continue to
pour money into an industry so shaped by the effects of dis-
crimination that the profits to be derived from congressional
WESTERN STATES PAVING v. WSDOT 5017
appropriations accrue exclusively to the beneficiaries, how-
ever personally innocent, of the effects of racial prejudice.”).
[3] Nevertheless, Congress may not merely intone the man-
tra of “discrimination” to satisfy the “searching examination”
mandated by equal protection. Adarand III, 515 U.S. at 223(internal quotation marks omitted); see also Croson, 488 U.S.
at 500 (“[T]he mere recitation of a ‘benign’ or legitimate pur-
pose for a racial classification is entitled to little or no
weight.”). Rather, we must evaluate the evidence that Con-
gress considered in enacting TEA-21 to ensure that it had a
“strong basis in evidence for its conclusion that remedial
action was necessary.” Id. (internal quotation marks omitted);
see also id. at 493 (plurality op. of O’Connor, J.) (“Absent
searching judicial inquiry into the justification for . . . race-
based measures, there is simply no way of determining what
classifications are ‘benign’ or ‘remedial’ and what classifica-
tions are in fact motivated by illegitimate notions of racial
inferiority or simple racial politics.”).
Both statistical and anecdotal evidence of discrimination
are relevant in identifying the existence of discrimination. See
Adarand VII, 228 F.3d at 1166. Congress considered the fol-
lowing statistical evidence when debating TEA-21’s enact-
ment in 1998:
• Racial minorities constitute more than 20% per-
cent of the United States population, but own
only 9% of all businesses. 144 CONG. REC.
H3945, H3958 (daily ed. May 22, 1998) (state-
ment of Del. Norton).
• Firms owned by racial minorities have, on aver-
age, gross receipts that are approximately one-
third those of firms owned by non-minorities. Id.• Although racial minorities own 9% of all busi-
nesses, they receive only 4.1% of federal con-
tracting dollars. Id.5018 WESTERN STATES PAVING v. WSDOT
• Women own nearly a third of all small businesses
but receive less than 3% of federal contracting
dollars. Id.• White business owners in the construction indus-
try receive more than 50 times as many loan dol-
lars per dollar of equity capital as African-
American owners with identical borrowing char-
acteristics. Id.• After the Supreme Court’s 1989 Croson decision,
many state and local governments removed affir-
mative action provisions from their public con-
tracts. This prompted a significant drop in racial
minorities’ participation in the construction
industry. In Richmond, Virginia, for example,
minority participation in construction decreased
from 40% of all contracts to less than 3% after
the city’s affirmative action program was discon-
tinued. Similar results were seen in Philadelphia,
Pennsylvania (97% decline), Tampa, Florida
(99% decline for African-Americans and 50% for
Hispanics), and San Jose, California (minority
participation fell from 6% to 1% in prime con-
struction contracts). Id.Congress also explicitly relied upon a Department of Jus-
tice study—entitled The Compelling Interest for Affirmative
Action in Federal Procurement: A Preliminary Survey—that
documented the discriminatory hurdles that minorities must
overcome to secure federally funded contracts. 61 Fed. Reg.
26,050 (May 23, 1996). The report found that discrimination
by trade unions and financial lenders often precludes racial
minorities from obtaining the experience and capital neces-
sary to start businesses. Id. at 26,055 (“Discrimination by
unions has been recognized as a major factor in preventing
minorities from obtaining employment opportunities in the
skilled trades.”); id. at 26,058 (citing evidence that African-
WESTERN STATES PAVING v. WSDOT 5019
Americans are three times more likely to be rejected for busi-
ness loans than whites). The study also found that even when
minorities are able to start a business, their success is often
hampered by discrimination by prime contractors, business
networks, suppliers, and bonding companies. Id. Such dis-
crimination increases minority-owned firms’ cost of doing
business; these costs must then be passed along to customers,
which results in minority-owned firms being less competitive
than those owned by non-minorities. See id. at 26,059(“institutional wall[s] and old-boy network[s] . . . make[ ] it
exceedingly difficult for minority firms to break into the pri-
vate commercial sector” (internal quotation marks omitted;
alterations in original)).
Although Congress did not possess evidence that minorities
suffer discrimination in every State’s public contracting mar-
ket, Congress need not undertake such an onerous task when
enacting legislation that is applicable on a nationwide basis.
See Rothe Dev. Corp. v. United States Dep’t of Def., 262 F.3d
1306, 1329 (Fed. Cir. 2001) (“Whereas municipalities must
necessarily identify discrimination in the immediate locality
to justify a race-based program, we do not think that Congress
needs to have had evidence before it of discrimination in all
fifty states . . . .”). Indeed, when the Eighth and Tenth Circuits
considered TEA-21’s constitutionality, both courts concluded
that the legislative record amply demonstrated Congress’s
compelling interest in remedying the effects of discrimination
within the transportation contracting industry. See Sherbrooke
Turf, Inc., 345 F.3d at 970 (“Congress has spent decades com-
piling evidence of race discrimination in government highway
contracting, of barriers to the formation of minority-owned
construction businesses, and of barriers to entry.”).
The Tenth Circuit undertook an especially exhaustive
inquiry into the evidence weighed by Congress and concluded
that “both the race-based barriers to entry and the ongoing
race-based impediments to success faced by minority subcon-
tracting enterprises . . . are caused either by continuing dis-
5020 WESTERN STATES PAVING v. WSDOT
crimination or the lingering effects of past discrimination on
the relevant market.” Adarand VII, 228 F.3d at 1175-76.
[4] In light of the substantial body of statistical and anec-
dotal material considered at the time of TEA-21’s enactment,
Congress had a strong basis in evidence for concluding that—
in at least some parts of the country—discrimination within
the transportation contracting industry hinders minorities’
ability to compete for federally funded contracts.
B
[5] Once the government has demonstrated that it has a
compelling basis for classifying individuals according to race,
it must also establish that its use of race is narrowly tailored
to further that interest. Indeed, “racial classifications are sim-
ply too pernicious to permit any but the most exact connection
between justification and classification.” Gratz, 539 U.S. at
270 (internal quotation marks omitted). The Supreme Court
has identified several factors that are relevant in determining
whether a racial classification is narrowly tailored: “the effi-
cacy of alternative remedies; the flexibility and duration of
the relief, including the availability of waiver provisions; the
relationship of the numerical goals to the relevant labor mar-
ket; and the impact of the relief on the rights of third parties.”
United States v. Paradise, 480 U.S. 149, 171 (1987).
1
Although “[n]arrow tailoring does not require exhaustion of
every conceivable race-neutral alternative,” it does “require
serious, good faith consideration of workable race-neutral
alternatives.” Grutter v. Bollinger, 539 U.S. 306, 339 (2003);
see also Adarand III, 515 U.S. at 237-38 (when undertaking
narrow tailoring analysis, courts must inquire “whether there
was any consideration of the use of race-neutral means to
increase minority business participation in government con-
tracting” (internal quotation marks omitted)).
WESTERN STATES PAVING v. WSDOT 5021
The TEA-21 regulations place a preference on the use of
race-neutral means—including informational and instructional
programs targeted toward all small businesses—to achieve a
State’s DBE utilization goal. See Sherbrooke Turf, Inc., 345
F.3d at 972 (“the regulations place strong emphasis on the use
of race-neutral means” (internal quotation marks omitted)).
Indeed, the regulations require a State to “meet the maximum
feasible portion of [its] overall goal by using race-neutral
means.” 49 C.F.R. § 26.51(a). Only when race-neutral efforts
prove inadequate do the regulations authorize a State to resort
to race-conscious measures to achieve the remainder of its
DBE utilization goal. As the Tenth Circuit recognized, “[w]e
therefore are dealing here with [regulations] that emphasize
the continuing need to employ non-race-conscious methods
even as the need for race-conscious remedies is recognized.”
Adarand VII, 228 F.3d at 1179.
2
A quota system is the hallmark of an inflexible affirmative
action program. While “[q]uotas impose a fixed number or
percentage which must be attained, or which cannot be
exceeded, . . . a permissible goal . . . requires only a good-
faith effort . . . to come within a range demarcated by the goal
itself.” Grutter, 539 U.S. at 335 (internal quotation marks
omitted; third and fourth alterations in original). In Croson,
the Supreme Court invalidated a program that required prime
contractors to whom the City of Richmond awarded construc-
tion projects to subcontract at least 30% of funds to minority-
owned businesses. 488 U.S. at 477. The Court considered the
program to be a “rigid racial quota” because waivers of the
30% goal were only permitted in “exceptional circum-
stances.” Id. at 478-79, 499.
The TEA-21 regulations explicitly prohibit the use of quo-
tas. 49 C.F.R. § 26.43(a). Moreover, where race-conscious
contracting goals are used, prime contractors can meet that
goal either by subcontracting the requisite amount of work to
5022 WESTERN STATES PAVING v. WSDOT
DBEs or by demonstrating good faith efforts to do so. Id.§ 26.53(a). A State likewise cannot be penalized by the fed-
eral government for failing to attain its DBE utilization goal
as long as it undertakes good faith compliance efforts. Id.
§ 26.47(a). TEA-21 therefore provides for a flexible system of
contracting goals that contrasts sharply with the rigid quotas
invalidated in Croson. See Sherbrooke Turf, Inc., 345 F.3d at
972 (“the [TEA-21] DBE program has substantial flexibili-
ty”).
A narrowly tailored remedial program must also include
adequate durational limitations. See Grutter, 539 U.S. at 341-
42 (because a “core purpose of the Fourteenth Amendment
was to do away with all governmentally imposed discrimina-
tion based on race . . . , race-conscious . . . policies must be
limited in time”). TEA-21 comports with this requirement
because it is subject to periodic reauthorization by Congress.
The debates concerning reauthorization ensure that Congress
regularly evaluates whether a compelling interest continues to
justify TEA-21’s minority preference program. See Sher-
brooke Turf, Inc., 345 F.3d at 972 (“Periodic legislative
debate assure[s] all citizens that the deviation from the norm
of equal treatment of all racial and ethnic groups is a tempo-
rary matter . . . .” (internal quotation marks omitted; first
alteration in original)).
3
[6] To be narrowly tailored, a minority preference program
must establish utilization goals that bear a close relationship
to minority firms’ availability in a particular market. In Cro-
son, for example, one of the constitutional shortcomings that
the Court identified in the Richmond program was the city’s
use of the proportion of minorities in the local population to
establish the 30% quota. 488 U.S. at 507. The Court explained
that this numerical goal “rest[ed] upon the completely unreal-
istic assumption that minorities will choose a particular trade
WESTERN STATES PAVING v. WSDOT 5023
in lockstep proportion to their representation in the local pop-
ulation.” Id. (internal quotation marks omitted).
The TEA-21 regulations avoid this pitfall. The regulations
do not establish a mandatory nationwide standard for minority
participation in transportation contracting. Indeed, the regula-
tions clarify that the 10% DBE utilization goal found in the
TEA-21 statute is “aspirational” only and that States are nei-
ther required—nor authorized—to set their own DBE goals at
10% by simply relying upon the statute. 49 C.F.R. § 26.41(b)-
(c).
[7] The TEA-21 regulations instead provide for each State
to establish a DBE utilization goal that is based upon the pro-
portion of ready, willing, and able DBEs in the State’s trans-
portation contracting industry. Id. § 26.45(b). This provision
ensures that each State sets a minority utilization goal that
reflects the realities of its own labor market. See Sherbrooke
Turf, Inc., 345 F.3d at 972 (“DOT has tied the goals for DBE
participation to the relevant labor markets.”).
4
Implementation of the race-conscious contracting goals for
which TEA-21 provides will inevitably result in bids submit-
ted by non-DBE firms being rejected in favor of higher bids
from DBEs. Although this places a very real burden on non-
DBE firms, this fact alone does not invalidate TEA-21. If it
did, all affirmative action programs would be unconstitutional
because of the burden upon non-minorities. Adarand III, 515
U.S. at 237 (dispelling the notion that strict scrutiny is “strict
in theory, but fatal in fact” (internal quotation marks omit-
ted)); see also Wygant v. Jackson Bd. of Educ., 476 U.S. 267,
280-81 (1986) (plurality op. of Powell, J.) (“When effectuat-
ing a limited and properly tailored remedy to cure the effects
of prior discrimination, such a sharing of the burden by inno-
cent parties is not impermissible.” (internal quotation marks
omitted)).
5024 WESTERN STATES PAVING v. WSDOT
The TEA-21 regulations include a number of provisions
designed to minimize the burden on non-minority firms. For
example, a firm owned by a non-minority can qualify as a
DBE if the owner can demonstrate that he is socially and eco-
nomically disadvantaged. 49 C.F.R. § 26.67(d). Moreover, the
$750,000 net worth limitation on DBE status ensures that
wealthy minorities who have not encountered discriminatory
impediments do not receive an unwarranted windfall under
the DBE program. Id. § 26.67(b).
5
[8] Overall, TEA-21 and its implementing regulations pos-
sess all the features of a narrowly tailored remedial program:
Race-conscious remedies are used only when race-neutral
means prove ineffective, these race-conscious measures are
employed in a flexible manner and for a limited duration, and
the program is tied to the labor market in each State and is
designed to minimize the burden on non-minorities. See Sher-
brooke Turf, Inc., 345 F.3d at 972 (concluding that “the DOT
regulations, on their face, satisfy the Supreme Court’s narrow
tailoring requirements”); Adarand VII, 228 F.3d at 1187(same).
[9] We are satisfied that TEA-21’s DBE program is a nar-
rowly tailored means of remedying the effects of race- and
sex-based discrimination within the transportation contracting
industry, and thus Western States’ facial challenge must fail.
V
We next consider Western States’ as-applied challenge to
the State of Washington’s implementation of TEA-21.
A
Western States argues that TEA-21 is unconstitutional as
applied by Washington because there is no evidence of dis-
WESTERN STATES PAVING v. WSDOT 5025
crimination within the State’s transportation contracting
industry. The State responds that it is not obligated to demon-
strate that its application of TEA-21 independently satisfies
strict scrutiny. The State instead argues that its DBE program
is constitutional because it comports with the federal statute
and regulations.7
The United States, which intervened solely to defend TEA-
21’s facial constitutionality, disagrees with Washington’s
effort to shelter its DBE program from as-applied scrutiny.
Indeed, at various stages throughout this litigation—including
during the district court and appellate oral arguments—the
United States has unambiguously conceded that TEA-21’s
race-conscious measures can be constitutionally applied only
in those States where the effects of discrimination are present.
See Br. for the United States at 28 (“DOT’s regulations . . .
are designed to assist States in ensuring that race-conscious
remedies are limited to only those jurisdictions where discrim-
ination or its effects are a problem . . . .”); Dist. Ct. Oral
Argument Tr. 11 (“With respect to the individual contract
goals, our regulations give maximum discretion to the states
to use those or not to use those, although . . . the use of race-
conscious goals need [sic] to be based on evidence of discrim-
ination or the effects of discrimination in the state that has to
be remedied.”).
The district court sided with Washington and held that a
“state recipient of federal highway funds is not required to
independently establish that its DBE program satisfied the
strict scrutiny standard.” Dist. Ct. Order 17. The district court
accordingly rejected Western States’ as-applied challenge
because the Washington DBE program is consistent with the
federal program’s requirements.
7
Western States does not dispute the fact that Washington’s DBE pro-
gram complies with the federal program’s requirements.
5026 WESTERN STATES PAVING v. WSDOT
As a threshold matter, we must therefore determine
whether Washington’s DBE program is even susceptible to an
as-applied challenge.
1
The Eighth Circuit is the only other appellate court to have
confronted an as-applied challenge to TEA-21.8 See Sher-
brooke Turf, Inc., 345 F.3d at 970. The Eighth Circuit con-
cluded that it was unnecessary for Minnesota and Nebraska to
establish that their DBE programs were premised upon a com-
pelling interest independent of Congress’s nationwide reme-
dial objective. Id. The court explained:
Compelling government interest looks at a statute or
government program on its face. When the program
is federal, the inquiry is (at least usually) national in
scope. If Congress or the federal agency acted for a
proper purpose and with a strong basis in the evi-
dence, the program has the requisite compelling gov-
ernment interest nationwide, even if the evidence did
not come from or apply to every State or locale in
the Nation.
Id.Although the Eighth Circuit did not require Minnesota and
Nebraska to identify an independent compelling interest for
their DBE programs, the court did inquire into whether the
States’ implementation of TEA-21 was narrowly tailored to
achieve Congress’s remedial objective. Id. at 973. In so doing,
the court considered whether discrimination had actually
occurred in Minnesota and Nebraska because “to be narrowly
tailored, a national program must be limited to those parts of
8
The Tenth Circuit in Adarand VII did not consider TEA-21’s constitu-
tionality as applied by a specific State and did not address whether it
would be appropriate to do so.
WESTERN STATES PAVING v. WSDOT 5027
the country where its race-based measures are demonstrably
needed. To the extent the federal government delegates this
tailoring function, a State’s implementation becomes critically
relevant to a reviewing court’s strict scrutiny.” Id. at 971.
Both Minnesota and Nebraska had hired outside consulting
firms to conduct statistical analyses of the availability and
capacity of DBEs in their local markets, and the Eighth Cir-
cuit relied upon those studies to hold that the States’ DBE
programs independently satisfied strict scrutiny’s narrow tail-
oring requirement. Id. at 973-74.
2
[9] We agree with the Eighth Circuit that Washington need
not demonstrate an independent compelling interest for its
DBE program. When Congress enacted TEA-21, it identified
a compelling nationwide interest in remedying discrimination
in the transportation contracting industry. Even if such dis-
crimination does not exist in Washington, the State’s imple-
mentation of TEA-21 nevertheless rests upon the compelling
nationwide interest identified by Congress.
[10] We also agree with the Eighth Circuit that it is neces-
sary to undertake an as-applied inquiry into whether Washing-
ton’s DBE program is narrowly tailored, and we therefore
conclude that the district court erred when it upheld Washing-
ton’s DBE program simply because the State complied with
the federal program’s requirements.9 Whether Washington’s
9
The district court cited cases from the Sixth and Seventh Circuits to
bolster its conclusion that Washington need not independently satisfy
strict scrutiny. The Seventh Circuit’s decision in Milwaukee County Pav-
ers Association v. Fiedler, 922 F.2d 419 (7th Cir. 1991) (Posner, J.), does
not support the district court’s unwillingness to pursue an as-applied nar-
row tailoring inquiry. There, a group of contractors challenged Wiscon-
sin’s implementation of the affirmative action provisions of a predecessor
statute to TEA-21. Id. at 421. The court refused to consider whether dis-
crimination had actually taken place in Wisconsin because the contractors
had conceded that the federal statute was constitutional both on its face
5028 WESTERN STATES PAVING v. WSDOT
DBE program is narrowly tailored to further Congress’s reme-
dial objective depends upon the presence or absence of dis-
crimination in the State’s transportation contracting industry.
If no such discrimination is present in Washington, then the
State’s DBE program does not serve a remedial purpose; it
instead provides an unconstitutional windfall to minority con-
tractors solely on the basis of their race or sex. As the United
States correctly observed in its brief and during oral argu-
ment, it cannot be said that TEA-21 is a narrowly tailored
remedial measure unless its application is limited to those
States in which the effects of discrimination are actually pres-
and as applied. Id. at 423 (“[The contractors’] arguments, whatever merit
they have or lack as an original matter, are inconsistent with the contrac-
tors’ decision not to challenge the validity of the federal statute or regula-
tions.”); see also id. (“[The contractors] challenge the Act neither on its
face nor as applied.”). Because constitutionality was not at issue, there was
no basis for the court to undertake an as-applied inquiry. Moreover,
although the only question before the court was whether Wisconsin’s pro-
gram complied with the federal statute, the court nevertheless observed
that the statute’s affirmative action provisions would be unconstitutional
if applied in a State with no history of discrimination against minorities.
See id. at 424 (“The contractors point out that the remedial objective
which persuaded the Supreme Court to uphold the set-aside program chal-
lenged in the Fullilove [v. Klutznick, 448 U.S. 448 (1980),] case may be
a fiction when it is applied to a liberal northern state with a relatively
small minority population, such as Wisconsin, that does not even attempt
to ascertain the existence of a legacy of discrimination . . . . But this is just
to argue that set-aside programs such as this, upheld on their face in Ful-
lilove, are, as administered, the practice of cynical racial or interest-group
politics. Maybe so. If so, the program violates the Constitution.”).
In the other case cited by the district court, Tennessee Asphalt Co. v.
Farris, 942 F.2d 969, 970 (6th Cir. 1991), the plaintiff did raise an as-
applied constitutional challenge to a TEA-21 predecessor statute. Invoking
Milwaukee County Pavers, the Sixth Circuit held that a State that imple-
ments the affirmative action provisions of a federal transportation statute
need not establish discrimination within its own jurisdiction. Id. at 975. In
so doing, the Seventh Circuit misread Milwaukee County Pavers in the
same manner as did the district court. Both courts overlooked the fact that
the plaintiffs in Milwaukee County Pavers were not pursuing an as-applied
constitutional challenge.
WESTERN STATES PAVING v. WSDOT 5029
ent. See Dist. Ct. Oral Argument Tr. 48 (“The state would
have to have evidence of past or current effects of discrimina-
tion to use race-conscious goals.”).
Moreover, even when discrimination is present within a
State, a remedial program is only narrowly tailored if its
application is limited to those minority groups that have actu-
ally suffered discrimination. In Croson, for example, one of
the rationales upon which the Supreme Court relied to invali-
date the city’s quota system was the program’s expansive def-
inition of “[m]inority group members,” which encompassed
“[c]itizens of the United States who are Blacks, Spanish-
speaking, Orientals, Indians, Eskimos, and Aleuts.” 488 U.S.
at 478 (second alteration in original). The Court admonished
that the
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.
If a 30% set-aside was “narrowly tailored” to
compensate black contractors for past discrimina-
tion, one may legitimately ask why they are forced
to share this “remedial relief” with an Aleut citizen
who moves to Richmond tomorrow?
Id. at 506; see also Wygant, 476 U.S. at 284 n.13 (plurality
op. of Powell, J.) (the “definition of minority to include
blacks, Orientals, American Indians, and persons of Spanish
descent further illustrates the undifferentiated nature of the
plan” (citation omitted)).
We have previously expressed similar concerns about the
haphazard inclusion of minority groups in affirmative action
programs ostensibly designed to remedy the effects of dis-
crimination. In Monterey Mechanical Co. v. Wilson, 125 F.3d
5030 WESTERN STATES PAVING v. WSDOT
at 704, we relied upon Croson to invalidate a California stat-
ute that required prime contractors on public projects to sub-
contract 15% of the work to minority-owned businesses and
5% to woman-owned businesses. The statute defined the term
“minority” to include Blacks, Hispanics, Native Americans,
Pacific-Asians, Asian-Indians, and over two-dozen subgroups.
Id. at 714. We concluded that the statute was not narrowly tai-
lored because it provided race-based preferences to “groups
highly unlikely to have been discriminated against in the Cali-
fornia construction industry.” Id. The overly inclusive desig-
nation of benefitted minority groups was a “red flag[ ]
signalling that the statute is not, as the Equal Protection
Clause requires, narrowly tailored.” Id.; see also Builders
Ass’n of Greater Chi. v. County of Cook, 256 F.3d 642, 647
(7th Cir. 2001) (holding that an ordinance that established
minimum levels of minority participation in county construc-
tion contracts was not narrowly tailored because it afforded
preferences to a “laundry list” of minorities, not all of whom
had suffered discrimination); Associated Gen. Contractors of
Ohio, Inc. v. Drabik, 214 F.3d 730, 737 (6th Cir. 2000) (inval-
idating a state statute that set aside 5% of state construction
contracts for “Blacks, American Indians, Hispanics, and Ori-
entals” because “[b]y lumping together [these] groups, . . . the
[program] may well provide preference where there has been
no discrimination, and may not provide relief to groups where
discrimination might have been proven”); O’Donnell Constr.
Co. v. District of Columbia, 963 F.2d 420, 427 (D.C. Cir.
1992) (“the random inclusion of racial groups for which there
is no evidence of past discrimination in the construction
industry raises doubts about the remedial nature of [a minority
set-aside] program” (internal quotation marks omitted)).
Accordingly, each of the principal minority groups bene-
fitted by Washington’s DBE program—Black Americans,
Hispanic Americans, Native Americans, Asian-Pacific Ameri-
cans, Subcontinent Asian Americans, and women—must have
suffered discrimination within the State. If that is not the case,
then the DBE program provides minorities who have not
WESTERN STATES PAVING v. WSDOT 5031
encountered discriminatory barriers with an unconstitutional
competitive advantage at the expense of both non-minorities
and any minority groups that have actually been targeted for
discrimination. See Builders Ass’n of Greater Chi., 256 F.3d
at 646 (a “state or local government that has discriminated
just against blacks may not by way of remedy discriminate in
favor of blacks and Asian-Americans and women” (emphases
added)).
B
Washington’s DBE program closely tracks the sample DBE
program developed by the USDOT. In setting its DBE goal
for the year 2000, the WSDOT first calculated the relative
availability of ready, willing, and able DBEs in the State.10 It
did so by dividing the number of transportation contracting
firms in the Washington State Office of Minority, Women and
Disadvantaged Business Enterprises Directory by the total
number of transportation contracting firms listed in the Cen-
sus Bureau’s Washington database. This calculation yielded a
figure of 11.17%, which represented the baseline availability
of DBEs.
The WSDOT then adjusted this figure to account for the
proven capacity of DBEs to perform work, as reflected by the
volume of work performed by DBEs on state projects
between 1994 and 1998. The WSDOT determined that an
upward adjustment was necessary to account for capacity
because DBEs had performed approximately 18% of the work
on state projects during that period. No adjustment was made,
however, to account for discriminatory barriers in obtaining
bonding and financing. The WSDOT explained that
“[b]onding and financing have not been issues. WSDOT,
through its DBE Support Services consultant, has been very
10
Washington’s 2000 DBE program is the only finalized, USDOT-
approved plan included in the record and is thus the only annual program
that is properly before us.
5032 WESTERN STATES PAVING v. WSDOT
aggressive in assisting DBEs with bonding and financing mat-
ters.” WSDOT, Disadvantaged Business Enterprise Program:
Participation Plan, at xviii-3 (2000). The WSDOT likewise
did not make any adjustment to its base figure to reflect the
effects of past or present discrimination because it lacked any
statistical studies evidencing such discrimination. On the basis
of the upward adjustment for capacity, the WSDOT arrived at
a final DBE utilization goal of 14%.11
The WSDOT then sought to ascertain the proportion of this
goal that could be achieved through race-neutral means. In
making that determination, it relied upon the 9% DBE partici-
pation rate on state-funded contracts that did not include affir-
mative action components. The WSDOT accordingly
reasoned that it would need to achieve 5% of its 14% DBE
utilization goal through race-conscious means. The USDOT
approved the WSDOT’s goal-setting methodology and the
totality of its 2000 DBE program.
C
Washington has conceded that “there’s [sic] no statistical
studies done by the state to try to establish the existence of
discrimination in the highway contracting industry that are
completed or that are valid.” Dist. Ct. Oral Argument Tr. 12.
Washington nevertheless argues that it possesses evidence of
discrimination because minority-owned firms had the capacity
to perform 14% of the State’s transportation contracting work
in 2000 but received only 9% of the subcontracting funds on
contracts that did not include affirmative action components.
The WSDOT arrived at that capacity figure by adjusting
the percentage of ready, willing, and able DBEs in Washing-
11
Although DBEs had performed 18% of work on state projects between
1994 and 1998, the State set the final capacity-adjusted figure at 14%
because TEA-21 reduced the number of eligible DBEs in Washington by
imposing more-stringent certification requirements.
WESTERN STATES PAVING v. WSDOT 5033
ton (11.17%) to reflect the fact that DBEs had received
approximately 18% of subcontracting funds between 1994
and 1998. This 18% figure was obtained, however, on con-
tracts that included affirmative action components. See Dist.
Ct. Oral Argument Tr. 20 (“I would venture to say that almost
all of the subcontractor attainment [between 1994 and 1998]
was race conscious because prior to TEA-21, we typically had
16 percent—our annual goal was always 16 percent, and that
was often the contract goal. . . . [I]n fact, that was one of our
problems when TEA-21 came around, the regulation had a
whole new methodology for calculating and we were never
certain what the proper level should be because we had
always had goals in the past.”). This number therefore does
not reflect the performance capacity of DBEs in a race-neutral
market. Indeed, the State acknowledged as much to the dis-
trict court. See id. at 21 (“[W]e suspected that our past attain-
ment was largely driven by the existence of goals on the
contracts, and so it was very difficult to analyze what would
be—what would have been the attainment absent those
goals.”).
The disparity between the proportion of DBE performance
on contracts that include affirmative action components and
on those without such provisions does not provide any evi-
dence of discrimination against DBEs. Indeed, even in States
in which there has never been discrimination, the proportion
of work that DBEs receive on contracts that lack affirmative
action requirements will be lower than the share that they
obtain on contracts that include such measures because minor-
ity preferences afford DBEs a competitive advantage.
Accordingly, the only figure upon which Washington can
plausibly rely to demonstrate discrimination is the disparity
between the proportion of DBE firms in the State (11.17%)
and the percentage of contracting funds awarded to DBEs on
race-neutral contracts (9%). This oversimplified statistical
evidence is entitled to little weight, however, because it does
not account for factors that may affect the relative capacity of
5034 WESTERN STATES PAVING v. WSDOT
DBEs to undertake contracting work. Indeed, the fact that
DBEs constitute 11.17% of the Washington market does not
establish that they are able to perform 11.17% of the work.
See Md. Troopers Ass’n v. Evans, 993 F.2d 1072, 1077 (4th
Cir. 1993) (“Inferring past discrimination from statistics alone
assumes the most dubious of conclusions: that the true mea-
sure of racial equality is always to be found in numeric pro-
portionality.”). DBE firms may be smaller and less
experienced than non-DBE firms (especially if they are new
businesses started by recent immigrants) or they may be con-
centrated in certain geographic areas of the State, rendering
them unavailable for a disproportionate amount of work. See
Coral Constr. Co. v. King County, 941 F.2d 910, 919 (9th Cir.
1991) (“Statistical evidence often does not fully account for
the complex factors and motivations guiding employment
decisions, many of which may be entirely race-neutral.”);
Associated Gen. Contractors of Ohio, Inc., 214 F.3d at 736(“If [minority-owned firms] comprise 10% of the total num-
ber of contracting firms in the state, but only get 3% of the
dollar value of certain contracts, that does not alone show dis-
crimination, or even disparity. It does not account for the rela-
tive size of the firms, either in terms of their ability to do
particular work or in terms of the number of tasks they have
the resources to complete.”); O’Donnell Constr. Co., 963 F.2d
at 426 (holding that the small proportion of D.C. public con-
tracts awarded to minority-owned firms did not establish dis-
crimination because “[m]inority firms may not have bid on
. . . construction contracts because they were generally small
companies incapable of taking on large projects; or they may
have been fully occupied on other projects; or the District’s
contracts may not have been as lucrative as others available
in the Washington metropolitan area; or they may not have
had the expertise needed to perform the contracts; or they may
have bid but were rejected because others came in with a
lower price.”). The State’s statistical evidence controls for
none of these factors.
Moreover, to the extent that this small disparity has any
probative value, it is insufficient, standing alone, to establish
WESTERN STATES PAVING v. WSDOT 5035
the existence of discrimination against DBEs. See Croson,
488 U.S. at 509 (plurality op. of O’Connor, J.) (“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.” (emphases
added)). Compare Md. Troopers Ass’n, 993 F.2d at 1078 &
n.3 (holding that there was no statistical evidence of discrimi-
nation where blacks constituted 22% of the relevant qualified
labor pool and 17.1% of the Maryland State Police force),
with Associated Gen. Contractors of Cal., Inc. v. Coalition for
Econ. Equity, 950 F.2d 1401, 1414 (9th Cir. 1991) (conclud-
ing that discrimination was likely to exist where minority
availability for prime contracts was 49.5% but minority dollar
participation was only 11.1%), and Cone Corp. v. Hillsbor-
ough County, 908 F.2d 908, 916 (11th Cir. 1990) (holding
that a “glaring 10.78% disparity between the percentage of
minority contractors in the County and the percentage of
County construction dollars awarded to minorities . . . clearly
constitutes a prima facie case of discrimination”).
The WSDOT likewise did not introduce any anecdotal evi-
dence of discrimination. In response to Western States’ dis-
covery request, the WSDOT identified only three formal
complaints alleging discrimination in Washington transporta-
tion contracts. Two of these complaints had been investigated
and rejected as meritless by the WSDOT; the third was still
under investigation.
Perhaps recognizing the insufficiency of its evidentiary
record, the State contended for the first time during oral argu-
ment before us that the affidavits signed by applicants seeking
DBE status provide evidence of discrimination within Wash-
ington. See 49 C.F.R. § 26.67(a) (“You must require appli-
cants to submit a signed, notarized certification that each
presumptively disadvantaged owner is, in fact, socially and
5036 WESTERN STATES PAVING v. WSDOT
economically disadvantaged.”). This argument is unavailing
for two reasons.
First, these affidavits are not included in the record and
thus are not properly before us. See United States v. Elias, 921
F.2d 870, 874 (9th Cir. 1990) (“Documents or facts not pre-
sented to the district court are not part of the record on
appeal.”). Second, even if we were to consider these affida-
vits, they do not provide any evidence of discrimination
within Washington’s transportation contracting industry. Not-
withstanding the State’s express representation to the contrary
during oral argument, these affidavits do not require prospec-
tive DBEs to certify that they have been victims of discrimi-
nation in the contracting industry. Rather, as mandated by the
federal regulations, the owner of a firm applying for DBE sta-
tus need only attest to having “been subjected to racial or eth-
nic prejudice or cultural bias, or hav[ing] suffered the effects
of discrimination, because of [his] identity as a member of
one or more [minority groups], without regard to [his] indi-
vidual qualities.” See Disadvantaged Business Enterprise Pro-
gram Uniform Certification Application, at 19, available at
http://www.omwbe.wa.gov/Application%20for%20
Website%20-%20Federal%20Program%20Only.pdf.
Such claims of general societal discrimination—and even
generalized assertions about discrimination in an entire
industry—cannot be used to justify race-conscious remedial
measures. See Croson, 488 U.S. at 498 (“[A] generalized
assertion that there has been past discrimination in an entire
industry provides no guidance for a legislative body to deter-
mine the precise scope of the injury it seeks to remedy. It has
no logical stopping point. ‘Relief’ for such an ill-defined
wrong could extend until the percentage of public contracts
awarded to [minorities] . . . mirrored the percentage of minor-
ities in the population as a whole.” (internal quotation marks
and citation omitted)); Shaw v. Hunt, 517 U.S. 899, 909-10
(1996) (“an effort to alleviate the effects of societal discrimi-
nation is not a compelling interest”); Wygant, 476 U.S. at 276
WESTERN STATES PAVING v. WSDOT 5037
(plurality op. of Powell, J.) (“Societal discrimination, without
more, is too amorphous a basis for imposing a racially classi-
fied remedy.”).
[12] The record is therefore devoid of any evidence sug-
gesting that minorities currently suffer—or have ever suffered
—discrimination in the Washington transportation contracting
industry. We must therefore conclude that Washington’s
application of TEA-21 conflicts with the guarantees of equal
protection because the State’s DBE program is not narrowly
tailored to further Congress’s remedial objective. The “exact
connection” between means and ends that is a prerequisite to
the use of racial classifications is demonstrably absent from
Washington’s DBE program. Gratz, 539 U.S. at 270 (internal
quotation marks omitted).12
VI
Western States’ facial challenge fails because Congress
identified a compelling remedial interest when it enacted
TEA-21 and the DBE program established by the USDOT’s
regulations is—on its face—a narrowly tailored means of
achieving that objective. We therefore affirm summary judg-
ment in favor of the United States, the USDOT, and the Fed-
eral Highway Administration.
[13] The State of Washington, however, has not proffered
any evidence of discrimination within its own contracting
market and has thus failed to meet its burden of demonstrating
that its DBE program is narrowly tailored to further Con-
gress’s compelling remedial interest. We therefore reverse the
district court’s grant of summary judgment as to the WSDOT,
the City of Vancouver, and Clark County, and remand this
12
The State’s failure to present evidence of discrimination against any
minority group alleviates the need for us to undertake a separate inquiry
into whether the Washington DBE program’s definition of presumptively
disadvantaged groups is overbroad.
5038 WESTERN STATES PAVING v. WSDOT
matter to the district court with instructions to enter summary
judgment in favor of Western States on its as-applied chal-
lenge.13 See Dewitt Constr. Inc. v. Charter Oak Fire Ins. Co.,
307 F.3d 1127, 1135 n.6 (9th Cir. 2002) (directing the district
court on remand to grant partial summary judgment where
there were no disputed issues of material fact).
AFFIRMED in part, REVERSED in part, and
REMANDED for further proceedings consistent with this opin-
ion.14
McKAY, Circuit Judge, concurring in part dissenting in part:
I agree with the majority’s discussion of the facial constitu-
tionality of TEA-21. However, as to its “as-applied” discus-
sion, the majority opinion splits the circuits without
persuasive support for its position. I am persuaded by the
position taken by both the Sixth and Seventh Circuits, and
therefore dissent in part.
The flaw that I see in the majority’s opinion is its improper
reliance on cases that are inapposite. Cases like Monterey
13
The city and county argue that they are entitled to summary judgment
on Western States’ damages claims because there is no evidence that they
engaged in intentional racial discrimination. The district court did not
reach this issue and instead dismissed the damages claims because they
“hinge upon the assertion that TEA-21 is unconstitutional.” Dist. Ct. Order
18. Although this Court “may affirm summary judgment on an alternative
ground to that given by the district court if the record fairly supports the
alternative ground,” Gulf USA Corp. v. Fed. Ins. Co., 259 F.3d 1049, 1060
n.13 (9th Cir. 2001), we need not decide whether it would be appropriate
to do so here. It will be necessary on remand for the district court to
address the State’s liability for damages, and thus we also remand Western
States’ damages claims against the city and county to allow the district
court to resolve all aspects of this issue in the first instance.
14
Each party shall bear its own costs on appeal. See Fed. R. App. P.
39(a)(4).
WESTERN STATES PAVING v. WSDOT 5039
Mechanical Co., Builders Ass’n of Greater Chicago, Drabik,
O’Donnell Construction Co., and Croson concern the consti-
tutionality of state, municipal or county race-based remedial
statutes or ordinances. The statute at issue in this appeal is a
national, congressionally mandated statute. The importance of
this distinction was appropriately noted in Tennessee Asphalt
Co. v. Farris:
[T]he joint lesson of Fullilove and Croson [is] that
the federal government can, by virtue of the enforce-
ment clause of the Fourteenth Amendment, engage
in affirmative action with a freer hand than states
and municipalities can do. And one way it can do
that is by authorizing states to do things that they
could not do without federal authorization.
Farris, 942 F.2d 969, 975 (6th Cir. 1991) (quoting Milwaukee
County Pavers Ass’n v. Fiedler, 922 F.2d 419, 423-24 (7th
Cir. 1991)) (internal quotations omitted).
The majority discounts the importance of Farris because of
its reliance on Milwaukee County Pavers. Maj. Op. at
5027-28 n.9. The majority opines that it is improper to rely on
Milwaukee County Pavers because it did not involve an “as-
applied” challenge. Id. I respectfully disagree.
Reading Milwaukee County Pavers as not discussing an as-
applied challenge focuses too much on the opinion’s form
instead of on its substance. This error is likely due to a slip
of the authoring judge’s pen. The court, after stating that the
plaintiffs did not “challenge the Act . . . on its face [or] as
applied[,]” phrased the plaintiffs’ argument as whether
Supreme Court precedent demonstrates that “the set-aside
program, as implemented in Wisconsin, is necessary to rectify
invidious discrimination.” Milwaukee County Pavers, 922
F.2d at 423 (emphasis added). Whether the parties, or the
court for that matter, use “proper” phraseology in articulating
their arguments is, to me, irrelevant. Recognizing the apparent
5040 WESTERN STATES PAVING v. WSDOT
conflict of words in the opinion, I am forced to rely on the
opinion’s substance.
The clear substance of the opinion in Milwaukee County
Pavers concerns an as-applied challenge to a congressional
enactment sought to remedy past discrimination. The plain-
tiffs did not “challenge the validity of the federal statute or
regulations” because their only concern was how the pre-
sumptively valid federal statutory and regulatory laws were
being implemented (or applied) by the state of Wisconsin. Id.The plaintiffs’ argument in Milwaukee County Pavers, quoted
below, is strikingly similar to the argument presented in this
case.
The [plaintiffs] point out that the remedial objective
. . . may be a fiction when it is applied to a liberal
northern state with a relatively small minority popu-
lation . . . that does not even attempt to ascertain the
existence of a legacy of discrimination that might
justify favored treatment for highway construction
firms owned by blacks, or Hispanics, or American
Indians, or Asians, or women.
Id. at 424. I see no difference between that argument and the
one presented by Plaintiffs in our case. I also agree with the
reasoning articulated in Milwaukee County Pavers that only
when the state exceeds its federal authority is it susceptible to
an as-applied constitutional challenge. Id. at 423-24.
In addition, the case relied upon by the majority to support
their contention that an as-applied challenge is required sup-
ports my conclusion. In Sherbrooke Turf, Inc. v. Minnesota
Department of Transportation, 345 F.3d 964, 968 (8th Cir.
2003), the Eighth Circuit analyzed the affirmative action
“program as implemented”1 by Minnesota and Nebraska. In
1
I find it ironic that the actual language used in Sherbrooke, “as imple-
mented,” is the same as that used in Milwaukee County Pavers, despite the
majority’s contention that they stand for different propositions.
WESTERN STATES PAVING v. WSDOT 5041
performing that analysis, the Eighth Circuit was concerned
with whether the individual state followed the appropriate
regulations, not with whether there was sufficient information
to establish past discrimination within the state. See Sher-
brooke Turf, 345 F.3d at 973 (explaining that MnDOT and
NDOR each commissioned an independent expert to ensure
compliance with 49 C.F.R. § 26.45(c)).
It cannot be legitimately disputed that Defendants have
complied with TEA-21 and its implementing regulations. If
the Plaintiffs are concerned that certain “minorities” are being
“provide[d] an unconstitutional windfall . . . solely on the
basis of their race or sex,” Maj. Op. at 5028, then they should
follow the procedure outlined in the Code of Federal Regula-
tions and attempt to rebut the presumption of disadvantage,
not file a federal lawsuit. See 49 C.F.R. § 26.67(b).
I respectfully dissent.