## F I L E D United States Court of Appeals Tenth Circuit 

### JUL 7 1998 

### PATRICK FISHER Clerk PUBLISH
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

CACHE VALLEY ELECTRIC COMPANY, a Utah corporation, Plaintiff - Appellant,

v. STATE OF UTAH DEPARTMENT OF TRANSPORTATION and CHARLES K. “CHUCK” LARSON, its civil rights manager, Defendants - Appellees,
UNITED STATES DEPARTMENT OF TRANSPORTATION, Defendant - Intervenor - Appellee. No. 97-4042

Appeal from the United States District Court

for the District of Utah (D.C. No. 96-CV-62-W)
George A. Hunt (Carolyn Stevens Jensen appearing wi th him on the briefs), Williams & Hunt, Salt Lake City, Utah, for Plaintif f - Appellant. Rebecca K. Troth (Isabelle Katz Pinzler, Acting Ass istant Attorney General, Mark L. Gross, Lisa J. Stark, Attorneys, on the brief), Washington, D.C., for Defendants.1 Larson was sued in his official capacity only. SeeAppellant’s App. at 2. - 2 - Before BRISCOE , Circuit Judge, McWILLIAMS , Senior Circuit Judge, and LUCERO , Circuit Judge.

LUCERO , Circuit Judge.

Cache Valley Electric Company (“CVE”), a Utah corpo ration that regularly bids on electrical contracts let by the Utah Depart ment of Transportation (“UDOT”), sued the United States Department of Tran sportation (“DOT”), UDOT, and Charles K. Larson, UDOT’s civil rights ma nager, 1 seeking to enjoin further operation of the Disadvantaged Business Ent erprise (“DBE”) program because of its use of racial and gender preferences . We affirm the district court’s determination that CVE lacks standing to bring the present action.
I Through the DBE program, it has been the longstandi ng policy of the United States Department of Transportation to expen d “not less than 10 percent of the amounts authorized to be appropriated” for cert ain federal highway programs “with small business concerns owned and controlled by socially and economically disadvantaged individuals.” Intermodal Surface Tra nsportation Efficiency Act of 1991, Pub. L. No. 102-240, § 1003(b)(1), 105 Stat. 1914, 1919 (1991) (“ISTEA”); Surface Transportation and Uniform Relocation Assis tance Act of 1987, Pub. L.- 3 -

No. 100-17, § 106(c)(1), 101 Stat. 132, 145 (1987) (“STURAA”). As a recipient of funds from the United States Department of Trans portation for use in DOTassisted contracts, UDOT is required to maintain an approved DBE program. See 49 C.F.R. § 23.41(a)(3). In this regard, UDOT esta blishes an annual overall DBE participation goal for UDOT projects financed with federal funds, and, to achieve that goal, identifies which projects have subcontra cting opportunities for DBEs and determines the appropriate DBE participation go al for each. See Appellant’s App. at 284. To qualify to participate in the DBE program, a bus iness must be both “small,” see ISTEA § 1003(b)(2)(A) (stating that no entity may qualify as DBE if its “average annual gross receipts over the precedi ng 3 fiscal years” exceeds $15,370,000); 59 Fed. Reg. 67,367, 67,367 (1994) (i ncreasing the revenue limit to $16,600,000 to adjust for inflation), and “owned an d controlled by socially and economically disadvantaged individuals,” id. § 1003(b)(1). Both the ISTEA and its predecessor statute, the STURAA, define “social ly and economically disadvantaged” in accordance with section 8(d) of t he Small Business Act (“SBA”), see 15 U.S.C. § 637(d), and its implementing regulatio ns. See ISTEA § 1003(b)(2)(B); STURAA § 106(c)(2)(B). Under the SB A, “[s]ocially disadvantaged individuals are those who have been s ubjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without- 4 -

regard to their individual qualities.” 15 U.S.C. § 637(a)(5). Economically disadvantaged individuals are defined as “socially disadvantaged individuals whose ability to compete in the free enterprise sys tem has been impaired due to diminished capital and credit opportunities as comp ared to others in the same business area who are not socially disadvantaged.” Id. § 637(a)(6)(A). The statute also establishes a presumption that “Bl ack Americans, Hispanic Americans, Native Americans, Asian Pacific American s, and other minorities” are socially and economically disadvantaged. 15 U.S.C. § 637(d)(3)(C); see ISTEA § 1003(b)(2)(B); STURAA § 106(c)(2)(B). Both the IST EA and the STURAA add women to that presumptive group. See ISTEA § 1003(b)(2)(B); STURAA § 106(c)(2)(B). Although the presumption is rebuttab le, the burden is on the challenging party. See 49 C.F.R. §§ 23.62, 23.69; id. pt. 23, subpt. D, app. C. Those not entitled to a presumption of social and e conomic disadvantage may nonetheless attain DBE status by satisfying the rac e- and gender-neutral criteria established in the regulations. See 13 C.F.R. §§ 124.105(c)(1), 124.106; 49 C.F.R. pt. 23, subpt. D, apps. A & C. Under UDOT’s implementation of the ISTEA and releva nt implementing regulations, a bid on federal highway projects is d eemed responsive only if the requisite percentage of DBE participation is attain ed or, if that is not possible, by the bidder certifying that good faith efforts were used in an attempt to attain the- 5 -

stated goal. See Appellant’s App. at 39-40. Under UDOT’s scheme, “ DBE status must be granted to any DBE contractor by UDOT priorto bid opening.” Id. at 42. In the winter of 1995, UDOT solicited bids on two s eparate projects that would be at least partially funded by the federal g overnment. CVE’s owners are not members of groups presumed to be disadvantaged and the company cannot qualify as a DBE because its gross revenues exceed the statutory limit to qualify as a “small” business. CVE submitted the lowest bi d to the prime contractor for the electrical work to be done on each of those two projects. In both cases, however, the prime contractor that ultimately won t he contract selected the next lowest bid in an attempt to satisfy the DBE percent age goal. Both prime contractors attested that but for the DBE program t hey would have used CVE to perform the needed electrical work. CVE filed this action shortly thereafter. The company seeks a declaration that the DBE program is unconstitutional and an injunction prohibiting UDOT from presuming certain minority groups to be socially and economically disadvantaged.
II The district court ruled that CVE did not have stan ding to pursue the current action. We review this determination de no vo. See Wilson v. Glenwood Intermountain Properties, Inc. , 98 F.3d 590, 593 (10th Cir. 1996). In order to have standing, CVE must demonstrate: (1) an “injury in fact,” meaning the- 6 -

“invasion of a legally protected interest that is ( a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothet ical; (2) a causal relationship between the injury and the challenged conduct,” mea ning that the “injury fairly can be traced to the challenged action of the defen dant, and has not resulted from the independent action of some third party not befo re the court; and (3) a likelihood that the injury will be redressed by a f avorable decision,” meaning that “the prospect of obtaining relief from the injury a s a result of a favorable ruling is not too speculative.” Northeastern Fla. Chapter of the Associated Gen. Contractors of Am. v. City of Jacksonville , 508 U.S. 656, 663-64 (1993) (internal quotations and citations omitted). In this type of equal protection case, “injury in f act” is defined as “the inability to compete on an equal footing in the bid ding process.” Id. at 666. “When the government erects a barrier that makes itmore difficult for members of one group to obtain a benefit than it is for mem bers of another group,” a plaintiff establishes injury by showing “the denial of equal treatment resulting from the imposition of the barrier, not the ultimat e inability to obtain the benefit.” Id. In addition, to prove its injury is “imminent” su ch that it may seek forwardlooking relief, CVE must make “an adequate showing that sometime in the relatively near future it will bid on another gover nment contract that offers financial incentives to a prime contractor for hiri ng disadvantaged2Defendants argue that CVE never challenged the entire program, but only

challenged “the manner by which UDOT identifies DBEs.” Thus, defendants argue, CVE lacks standing because its annual average gross receipts—$40 million—are well above the statutory threshold for admission into the program. SeeISTEA § 1003(b)(2)(A); 59 Fed. Reg. at 67,367; Wilson , 98 F.3d at 593 (“[A] person who fails to satisfy lawful, nondiscriminatory requirements or qualifications for the benefit lacks standing to raise claims of discrimination in the denial of the benefit.”). Although we agree with defendants that CVE would lack standing if all it sought to do was challenge the admission criteria for the DBE program, we cannot construe plaintiff’s challenge in so limited a fashion. Its prayer for relief states that the “DBE program on its face and as applied violates the Fifth and Fourteenth Amendments . . . because it utilizes inherently suspect gender and/or racial-based classifications . . . .” Appellant’s App. at 5. Moreover, plaintiff strenuously argued both before the district court and on appeal that its injury is attributable to the DBE program and not to its inability to participate in that program. SeeAppellant’s App. at 814; Appellant’s Br. at 25. Thus, plaintiff’s position is clearly a challenge to the entire program based on its usage of allegedly improper race and gender preferences. To hold otherwise would favor semantics over substance. - 7 - subcontractors.” Adarand Constructors, Inc. v. Pen a , 515 U.S. 200, 211 (1995). Under this framework, we agree with the district co urt that plaintiff has demonstrated an injury in “its inability to compete for government subsidized contracts on an equal footing with businesses class ified as DBEs pursuant to the Section 8(a) program.” 2 Moreover, pointing to the two contracts that it l ost as a result of the DBE program and relying on its repres entation that it will continue to apply for UDOT electrical subcontracts in the relat ively near future, CVE has also established that its injury is “imminent.” Having defined its injury as the inability to compe te on equal footing, plaintiff must also demonstrate that such injury is “fairly traceable” to the disputed conduct of defendants—namely, the use of a llegedly unconstitutional3 This is unlike the situation in City of Jacksonvillein which 10% of the funds

spent on the city’s contracts were required to go to minority- and women-owned businesses. See508 U.S. at 658. When, as there, the set-aside is conditioned solely on race or gender, the definition of the injury as the inability to compete on equal footing makes it explicitly traceable to the disputed preference and the elimination of that preference therefore must redress the injury. Seeid. at 666 n.5. - 8 - race and gender preferences—and that the relief sou ght—namely, the elimination of the disputed preferences—will provide redress fo r the injury claimed. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 560-61 (1992). “Traditionally, redressability and traceability overlap as two side s of a causation coin.” Dynalantic Corp. v. Department of Defense , 115 F.3d 1012, 1017 (D.C. Cir. 1997). Though CVE points to Adarandas dispositive on both causation and redressability, we do not find Adarandcontrolling. In Adarand , the standing analysis was limited to a detailed discussion of ho w to demonstrate an injury of sufficient imminence to satisfy standing requiremen ts for forward-looking relief.
See id. at 210-12. Although Adarand ’s definition of injury necessarily impacts whether a plaintiff will be able to demonstrate tra ceability and redressability, Adarandoffers no analysis on these points, instead merely stating “that Adarand has standing to bring this lawsuit.” See id. at 212. Thus, although the plaintiff in Adarandmade a challenge similar to CVE’s, the Adarand Court is silent on what impact the severability of the disputed preferences and the existence of race- and gender-neutral criteria have on the analysis of tra ceability and redressability. 3- 9 -

Here, assuming for the sake of argument that plaint iff has established that its injury is “fairly traceable” to the DBE program and its race and gender preferences, it would be pure speculation to conclu de that invalidating the allegedly unconstitutional preferences would amelio rate plaintiff’s ability to compete in any way. This is true for two reasons. First, the disputed preferences are severable from the rest of the DBE program and thus the program would remain viable even absent those preferences. Secon d, the plaintiff has adduced no evidence that the elimination of the preferences wo uld result in any meaningful reduction in the number of qualifying DBEs. We the refore must conclude that plaintiff lacks standing because any anticipated re dress from a favorable decision is wholly speculative. A. Severability Plaintiff argues that its injury is redressable bec ause eliminating the allegedly unconstitutional presumption will eviscer ate the statute. We disagree. “The standard for determining the severability of a n [allegedly] unconstitutional provision is well established: ‘Unless it is eviden t that the Legislature would not have enacted those provisions which are within its power, independently of that which is not, the invalid part may be dropped if wh at is left is fully operative as a law.’” Alaska Airlines, Inc. v. Brock , 480 U.S. 678, 684 (1987) (quoting Buckley v. Valeo , 424 U.S. 1, 108 (1976) (per curiam)). Here, the basic intent of the- 10 -

operative statute is to foster growth in small busi nesses owned by “socially and economically disadvantaged” people. The ISTEA allo ws a small business entity to qualify as “socially and economically disadvanta ged” in either of two ways: first, by relying on the race- or gender-based pres umption of such disadvantage,

see ISTEA § 1003(b)(2)(B); or, second, by satisfying t he race- and gender-neutral criteria established in the statute and amplified i n the regulations, see 15 U.S.C. §§ 637(a)(5), 637(a)(6)(A); 13 C.F.R. §§ 124.105(c) , 124.106; 49 C.F.R. pt. 23, subpt. D, app. C. Consequently, there is no truth to CVE’s claim that socially disadvantaged individuals—and, by extension, econom ically disadvantaged individuals—are necessarily minorities. See Appellant’s Reply Br. at 16. Based on this statutory framework, it is clear thatthe legislative intent to foster development in small businesses whose owners have had to overcome social and economic hardship would remain even in t he absence of the challenged presumption. To conclude otherwise would erroneous ly ignore the statutory raceand gender-neutral methods of establishing social a nd economic disadvantage.
See American Stores Co. v. American Stores Co. Retirem ent Plan , 928 F.2d 986, 990 (10th Cir. 1991) (“Courts should attempt to giv e some reasonable meaning to all of the words included in a legislative enactmen t.”); Bridger Coal Co./Pac. Minerals, Inc. v. Director, OWCP, United States Dep ’t of Labor , 927 F.2d 1150,- 11 -

1153 (10th Cir. 1991) (“We will not construe a stat ute in a way that renders words or phrases meaningless, redundant, or superfluous.” ). The legislative history to the SBA and the ISTEA fu rther indicates that the presumption is severable from the rest of the DBE p rogram. The House Conference Report accompanying the passage of the I STEA discusses the potential benefits of the DBE program, including “a dditional tax revenues paid to the state by DBE firms; unemployment tax reduction; racial and gender diversity in the highway construction field; economic develop ing in disadvantaged communities as a result of increased capital to DBE s; and an increase in the number of skilled subcontractors in the highway con struction field, thus providing for greater competition among such contractors in t he future.” See H.R. Conf. Rep. No. 102-404, at 306 (1991), reprinted in 1991 U.S.C.C.A.N. 1679, 1686. Although the allegedly impermissible goal of racial and gender diversity is included in this list, all of the other stated bene fits are completely unrelated to racial or gender preference. In addition, the legi slative history of amendments to the SBA effectively indicates that the primary goal of the ISTEA’s DBE program is to aid socially and economically disadvantaged b usinesses. The added presumption serves only as recognition that “in many . . . cases status as a minority can be directly and unequivocally correlat ed with social disadvantagement and this condition exists regardle ss of the individual, personal- 12 -

qualities of that minority person.” See H.R. Conf. Rep. No. 95-1714, at 21 (1978), reprinted in1978 U.S.C.C.A.N. 3879, 3882; see also id. at 22 (“[T]he Conferees realize that other Americans may also suf fer from social disadvantagement because of cultural bias. For exa mple, a poor Appalachian white person who has never had the opportunity for a quality education or the ability to expand his or her cultural horizons, may similarly be found socially disadvantaged, provided that the conditions leading to such disadvantagement are beyond the ability of the person to control.”), rep rinted in1978 U.S.C.C.A.N. 3879, 3882. The legislative history, therefore, co nfirms that Congress would have enacted this legislation regardless of the allegedl y impermissible goal of favoring minority- and women-owned businesses.

B. Meaningful Reduction in Number of DBEs The DBE program would continue even absent the disp uted presumption, so that small businesses whose owners could prove theywere disadvantaged—and thereby qualify as DBEs—would continue to have an a dvantage over businesses like CVE that are too large to qualify as DBEs. Ho wever, we recognize that CVE might nonetheless establish standing by demonstrati ng that a favorable judicial determination would “likely” improve the terms of c ompetition it faces. See Defenders of Wildlife , 504 U.S. at 561. To do this, however, CVE would have to show at a bare minimum that the practical effect of eliminating the presumption- 13 -

would be some meaningful reduction in the number of DBEs against which it would be forced to compete. The reduction would have to be meaningful else a claimed reduction in the number of contracts awarde d to DBEs would be no more than speculation and accordingly insufficient to es tablish standing. Because, at summary judgment, it is a plaintiff’s burden to add uce evidence sufficient to establish necessary jurisdictional facts, see id. , CVE may not establish standing by merely hypothesizing that elimination of the pre sumption would improve its terms of competition. Yet that is all it has done in this case. In fact, the record before us includes no evidence that any DBEs would be disqualified as a result of eliminating the presumption. In its complaint, CVE points to two separate contra cts it lost to High Desert Contractors, Inc. (“High Desert”) solely because Hi gh Desert is a DBE. See Appellant’s App. at 4. According to UDOT, “High De sert is certified as a DBE because of its president’s . . . Hispanic national origin andbecause [the president] demonstrated to the satisfaction of the SBA that sh e was socially and economically disadvantaged.” Appellant’s App. at 2 87 (declaration of Charles K. Larson, Civil Rights Manager for UDOT) (emphasis ad ded). But CVE has adduced no evidence that the SBA’s determination of social and economic disadvantage was based on consideration of the alle gedly impermissible presumption. Indeed, the president of High Desert indicated that the SBA’s- 14 -

certification “was on the basis of my national orig in . . . andbecause I demonstrated to the satisfaction of the SBA that I was socially and economically disadvantaged,” see id. at 311 (declaration of Victoria Gilbert, presidentof High Desert) (emphasis added), and CVE has offered nothi ng to refute her claim. Accordingly, any suggestion that High Desert would not continue to qualify as a DBE even if deprived of the disputed presumption is pure speculation. With respect to other subcontractors, the record do es contain a list of businesses that UDOT has certified as DBEs. The re cord, however, is silent on whether those subcontractors relied on the disputed presumption, the race- and gender-neutral criteria, or both to receive such ce rtification. In fact, there is no evidence that any other subcontractors against whom CVE competes would lose their DBE status as a result of eliminating the pre sumption. CVE has therefore made no showing that an improvement in its terms of competition for subsequent contracts would likely result from a substantive ad judication in its favor. Standing is denied.
AFFIRMED. Judge McWilliams dissents.