.B. IEPA Regulations

Bowen also argues that it is likely to prevail on the merits because Channahon, in accepting
Great Midwest’s offer to indemnify the Village in the event of a legal challenge by Bowen, violated
the Illinois Criminal Code and the IEPA procurement regulations, thus rendering the contract
between Great Midwest and Channahon void. As an initial matter, we fail to see the relevance of
Channahon’s potential, and unlikely, criminal responsibility in this civil motion for a preliminary
injunction. Channahon’s allegedly wrongful conduct in relation to the bidding process for the
wastewater treatment facility can be more appropriately considcred under the Illinois Administrative
Code.

The Ilinois Administrative Code prohibits the “providing and administration of loans by the
State of Illinois, and of subagrcements awarded by loan recipients under those loans, must be
accomplished free from bribery, graft, kickbacks, and other corrupt practices.” 35 III. Admin. Code
365.610(h)(1). Bowen contends that Channahon’s acceptance of Great Midwest’s offer of
indemnification constituted a “corrupt practice.” We donot agree. Under the cannon of construction
ejusdem generis, “where gencral words follow the enumeration of particular classes of things, the
general words will be construed as applying only to things of the same general class as those
enumerated.” Black’s Law Dictionary, 517 (6th ed. 1990). Applying this cannon of construction,
we find that Channahon’s acceptance of Great Midwest’s indemnification offer does not constitute
a “corrupt practice” within the meaning of section 365.610(h)(1).

Bowen also points to a regulation requiring that bidding documents contain “a clear
explanation of the method of bidding, the method of evaluation of bid prices, and the basis and

method for award of contract.” 35 Ill. Admin, Code 365.620(b)(1)(C); see also 35 Ill. Admin. Code

19



program at issue in the instant case. The goal of the Safeco program was to achieve a fair share of
DBE participation. Like Channahon, the defendant in Safeco required bidders to take positive steps
to utilize small, minority, and women’s businesses. Bidders were required to document their
compliance with the DBE rules and the defendant retained the right to reject bids that did not
comply. /d. at 678. Although the Safeco court analyzed the specifications under strict scrutiny, it
avoided holding that minority solicitation requirements, in and of themselves, necessarily constitute
aracial preference: “/pjerhaps ... the government imposes a racial classification when it compels
all contractors to solicit minority subcontractors. After all, such a policy would impose compliance
costs on contractors and will harm white subcontractors ifit imposes a racial preference.” Id. at 690
(emphasis added), The Safeco court found evidence that the defendant required more than mere
solicitation because it indicated during discovery that contractors were mandated to accept
competitive bids from MBE subcontractors. Thus, the court held that the defendant’s administration
of the regulations “indisputably pressure[d]” contractors to hire minority subcontractors even if it
does not expressly require such action. Jd. at 692.

The reasoning applied by the D.C, Circuit in. MD/DC/DE Broadcasters Association v, Fed'‘l
Communications Commission, 236 F.3d 13 (D.C. Cir. 2001), was similar to the theory relied upon
by the Sixth Circuit in Safeco, At issue in MD/DC/DE Broadcasters was an FCC policy that
tequired stations to “establish, maintain and carry out a positive continuing program of specific
practices designed to ensure equal opportunity and nondiscrimination in every aspect of station
employment policy and practice,” Jd. at 16. Under the plan, stations were required to seek out
resources for referrals for women and minority applicants. See id. at 17. Stations also had to record

the race and sex of applicants and each person hired. See id. The FCC would investigate the

13



development in Channahon, including the construction of literally thousands of homes and a
downtown type area for the Village. It is estimated that 300 housing units will be added to the
wastewater treatment plan by 2004. Once the wastewater treatment plan reaches its capacity,
however, the IEPA will prohibit the connection of any other residential or commercial structures.
Thus, a delay in construction “would effectively bring a halt to the continued development of the six
subdivisions currently platted and two others currently in the planning stages.” A delay would
therefore injure the individuals who have contracted for homes in these subdivisions, the developers

of the subdivisions and commercial buildings, and the overall economy of Channahon.

In addition, any interruption to the construction is likely to cause significant work and cost.
The construction is now approximately 16% completed. The work already performed by Great
Midwest and its subcontractors includes survey and layout work, substantial excavations, the
placement of underground piping, the placement of rebar for concrete work, and the pouring of
concrete, the submission of approximately 130 shop drawings, and placement of orders for the
manufacturing and fabrication of major pieces of equipment. An injunction prohibiting Great
Midwest from continuing work would also impact the subcontractors and suppliers with whom Great
Midwest has contracted, potentially spawning continued litigation with a myriad plaintiffs.
Additionally, any delay could cause damage to supplies or tools already on site, erosion of the earth
work already completed, and increased costs to the Village in the form of insurance or storage
facilities. We are unconvinced by Bowen’s argument that, if granted the injunction, it could prevent
many of these harms by simply stepping into Great Midwest’s shoes with little delay or disruption

to existing subcontracts.

23


Under the USEPA and IEPA loan program, loan recipients must also follow the six
affirmative steps contained in various sections of the Code of Federal Regulations governing federal
grants to states. See Defendant’s Ex. C. Under the USEPA loan program, “[t]he State must agree
to comply and require all recipients of funds ‘directly made available by’ capitalization grants to
comply with applicable Federal authorities.” 40 C.F.R. §35,3145(a); see also Def. Ex. C. Federal
regulations require loan recipients to accomplish their fair share objectives by complying with six
affirmative steps designed to widen the pool of subcontracting applicants. In particular, loan
recipients should: (1) include small, minority, and women’s businesses on solicitation lists; (2)
assure that small, minority, and women’s businesses are solicited whenever they are potential
sources; (3) divide total requirements, when economically feasible, into small tasks or quantities to
permit maximum participation by small, minority and women’s businesses; (4) establish delivery
schedules, when the requirements of the work permit, which will encourage participation by small,
minority and women’s businesses; (5) use the services of the Small Business Administration and the
Office of Minority Business Enterprise of the U.S. Department of Commerce, as appropriate; and
(6) require any subcontractors to take these affirmative steps. See 40 C.F.R. §35.3145(d).* To
receive USEPA funding, Illinois and, in tum, the loan recipient, must also ensure that projects
assisted with federal funds comply with the DBE requirements by ensuring that adequate records are

retained to demonstrate compliance with the requirements. See Def, Ex. E at 4, Def. Ex. C.

“Another section of the federal regulations, 40 C.F.R. §31.36(e), which provides uniform
administrative requirements for grants and cooperative agreements to state and local
governments regarding USEPA grants, also requires the grantee and subgrantee of the loan to
take all necessary affirmative steps to assure that DBEs arc used when possible.

4



365.620(b)(3)(A) (requiring that bids be evaluated according to the methods and criteria set forth in
the bidding documents). Bowen contends that the contract between Great Midwest and Channahon
is void because, in awarding the contract, the Village considered a factor, Great Midwest’s offer to
indemnify Channahon, that was not set forth in the bidding documents. Plans and bid specifications
must be as detailed as possible. See Smith y. Intergovernmental Solid Waste Disposal Assoc., 605
N.E.2d 654, 665 (Il. App. 1992). In the instant case, it would not have been possible for Channahon
to include an indemnification provision in the bid specifications because at the time it formulated
the specifications it did not know that indemnification would be necessary. Furthermore, the
variance alleged in the contract is not material because it did not give Great Midwest “a substantial
advantage or benefit not enjoyed by other bidders.” /d. at 666. At the time Channahon awarded the
bid to Great Midwest, it believed that Great Midwest was the lowest responsible bidder and was
therefore entitled to the contract. Because Channahon believed that Great Midwest was the winning
bidder, Great Midwest’s offer of indemnification did not afford them an advantage over contractors
who had submitted higher or nonresponsive bids. We therefore find that Bowen does not have a
likelihood of establishing that the contract between Channahon and Great Midwest is void under the
Illinois Administrative Code.
2. Preliminary Injunction Analysis
Having concluded that Bowen has a marginal likelihood of success on the merits,'4 we now

turn to the other requirements for a preliminary injunction.

‘Contrary to Bowen’s assertions, we do not believe that Bowen has established that it has
an “overwhelming” likelihood of success on the merits. Affirmative action is a controversial and
ambiguous area of the law. At this early stage of the litigation it is possible only to find that
Bowen has some likelihood of success.

20



As stated earlier, Channahon’s wastewater treatment facility is steadily nearing capacity. It
is estimated that the plant will be at its capacity by early 2004."° According to Great Midwest’s
current schedule for the project, work should be substantially complete by March 2004 and complete
by June 2004. The project is currently approximately 16% complete. Channahon and Bowen
disagree regarding the delay in construction that would result from our imposition of an injunction:
Channahon contends that the delay could be as great as 30 months, while Bowen contends that it
could complete the work according to Great Midwest's current schedule.'® Although Channahon’s
estimation of the possible delay seems somewhat inflated, we find implausible Bowen’s contention
that it can complete the project on time if an injunction is issued. In fact, we believe that the delay

could be quite substantial.

The efficacy of Channahon’s wastewater treatment facility is obviously of crucial importance
to the Village. A delay in the completion in the wastewater treatment facility would prove disastrous

for the Village and the public. There is currently a great deal of commercial and residential

‘Bowen contends that “{t}he Seventh Circuit requires that any assessment of the harms
inherent in any matter seeking injunctive relief to address and remedy deprivations and/or
violations of constitutionally protected rights and liberties are to be made at the time the request
for injunctive relief was filed.” Pl. Supp. Brief at 3. Bowen’s argument is a clear misstatement
of the law. The cases cited by Bowen involved motions seeking to enjoin the sale of land. See
Patsy Paris, et al. v. Dep't of Housing and Urban Development, 713 F.3d 1314, 1344 (7th Cir.
1983); Bastian v. Lakefront Realty Corp., 581 F.2d 685 (7th Cir. 1978); Ramsburg y. American
Investment Company of Illinois, 231 F.2d 333 (7th Cir. 1956). At issue in those cases was
whether the motions for preliminary injunction were moot because the land sale had been
completed. The Seventh Circuit held that it is within the discretion of the court to order the
defendant to restore the status quo where the court still has jurisdiction. See Patsy Paris, 713
F.3d at 1344. These cases simply do not require us to assess the harms as of the date that Bowen
requested injunctive relief.

"6 Predictably, Great Midwest agrees with Channahon’s assertion that the construction
would be delayed by an injunction.

22



Despite the apparent lack of discrimination in Channahon’s construction industry, Channahon
adopted the IEPA’s sample bid specifications rather than developing a more appropriate race-neutral
plan. Channahon used the MBE fair share objectives that were derived froma state-wide 1997 IEPA
study. The Village does not maintain any reports, studies, analysis, or data to suggest that there is
a pattern, either currently or historically, of any discrimination in the awarding of bids for public
contracts in Channahon. See Pl, Ex. C at 104. Likewise, Dolezal had no knowledge of the Village
ever conducting its own research to determine the most appropriate fair share objectives for minority
and women participation. See id. at 105. This evidence indicates that the Village lacked a “strong
basis in evidence for its conclusion that remedial action was necessary.” See Croson, 488 U.S. at
500.

Channahon, however, argues that it was required by the USEPA and IEPA to include the
DBE requirements in their bid specifications. Although the state and federal governments imposed
some obligations on Channahon, the Village’s hands were far from tied. ‘9 fHlinois statute requires
that construction contracts receiving loans under the program include “[e]vidence that the contractor
has taken affirmative steps, such as, but not limited to, a copy of the advertiscment(s) and the record

of negotiation, in accordance with federal Executive Order 11625 and 12138", to assure that small,

There is dicta in Builders Association indicating that where local governments are
charged with enforcing state laws preventing private discrimination the municipalities need not
demonstrate that they are acting to remedy their own past discrimination. 256 F.3d at 644,
Presumably then, a showing that the statute is designed to remedy discrimination by the state as a
whole is sufficient. To date, no court has applied this exception. Because this dicta does not
comport with Croson, and because the IEPA statute left Channahon with considerable discretion
to develop its own plan with regard to DBEs, we do not follow this exception.

"These Executive Orders do not mandate the racial preference included in Channahon’s
specifications.

17



directory of female- and minority-owned businesses in an effort to assist contractors in soliciting
DBEs, There is evidence that Bowen relied upon this directory in developing a list of DBEs from
which it then solicited bids via mailed notices and phone calls. Bowen kept records of these efforts.

Bowen claims that despite these efforts it did not receive any proposals or bids from qualified
DBEs. Therefore, pursuant to article 28.04.1.8, Bowen submitted with its bid a “Bidder
Certification” informing the Village that it had not received inquiries or proposals from qualified
DBEs. Bowen also submitted a second certification that it would not be awarding any subcontracts.
Contrary to Bowen’s assertions, the Village contends that Bowen received proposals from five
entities that identified themselves as either a MBE or WBE.’ Bowen claims that these businesses
did not submit with their bids evidence that they were qualified DBEs. Accordingly, Bowen
contends, it was justified in treating these businesses as unqualified and certifying to the Village that
it had not received bids from qualified DBEs, The Village contends that two of the five DBEs who
submitted bids, Ability Rockroad and B&R Electric Venture Contractors, were on the Capital
Development Board’s list of certified MBE/WBEs, which Bowen used in soliciting bids.

At the bid opening on August 15, 2002, it was determined that Bowen had submitted the
lowest bid and that Great Midwest had submitted the second lowest bid. On August 19, 2002, Great
Midwest filed an objection claiming that the Village should not award the contract to Bowen because
Bowen did not comply with the DBE requirements. On August 22, 2002, Bowen wrote to
Channahon requesting that it de-certify that Bowen would not be using any subcontractors. The

letter further stated that it had not reccived any proposals from MBE/WBEs. It was not until

7 Bowen allegedly received bids from the following DBEs Garth Masonry Corporation,
International Test & Balance, Inc., S&S Finance, Inc., Ability Rockroad Co., and B&R Electric
Venture Contractors.



employee Jane Carlson prepared the bid specifications for Channahon. Carlson testified that when
assembling the bid specifications she used the MBE specifications contained in the IEPA sample
documents. These documents, and ultimately Channahon’s bid specifications, contained two sets
of DBE objectives: one set applicable to the state, and the other to each county. Carlson stated that
she included both sets of percentages because she was following the sample documents provided by
the IEPA. Neither Strand nor Channahon performed any independent analysis, surveys, or studies
to determine which DBE percentages Channahon should use in their specifications, Carlson testified
that she did not discuss the objectives with anyone from Channahon. Edward Dolezal, Director of
Public Works for the Village of Channahon, gave deposition testimony that he was not aware of any
discrimination in public contracting by the Village and that the Village has never received any
complaints of discrimination with regard to public works construction.

Channahon began advertising for bids in June 2002, The Village’s bid specifications
contained several pages relating to the DBE requirements. Article 28 of VOC’s bid specifications
deals with the Utilization of Small, Minority, and Women’s Businesses. Article 28.02.01 defines a
MBE asa business which is : “(1) Certified as socially and economically disadvantaged by the Small
Business Administration, (2) certified as a minority business enterprise by a State or Federal agency,
or (3) an independent business concern which is at least 51 percent owned and controlled by minority

group member(s).*” The specifications define a WBE as “a business which is certified as such by

5 A minority group member is an individual who is a citizen of the United States and one
of the following: (i) Black American; (ii) Hispanic American (with origins from Puerto Rico,
Mexico, Cuba, South or Central America); (iii) Native American (American Indian, Eskimo,
Aleut, native Hawaiian); or (iv) Asian-Pacific American (with origins from Japan, China, the
Philippines, Vietnam, Korea, Samoa, Guam, the U.S. Trust Territories of the Pacific, Northen
Marianas, Laos, Cambodia, Taiwan or the Indian subcontinent).

6


Furthermore, Ilinois statute required that Channahon’s construction contract instruct
contractors to include in their bids “[e]vidence that the contractor has taken affirmative steps, such
as, but not limited to, a copy of the advertisement(s) and the record of negotiation in accordance with
federal Executive Order 11625 and 12138, to assure that small, minority and women’s businesses
are used when possible as sources of supplies, equipment, construction and services.” 35 II. Admin.
Code 365.620 (d)(2)(4) (West 2002).

Channahon’s Bid Specifications

To meet its obligations under its contract with the USEPA, IEPA assisted Channahon in
complying with the DBE requirements by providing the Village with a packet entitled
“Documentation Required In Plans and Specifications for Sewage Treatment Works Projects to be
Constructed Under the Water Pollution Control] Loan Program.” Def. Ex. F. The front page of the
packet contains the following language: “[t]he attached front-end document package may be utilized
by the loan applicant to comply with the regulations of the Water Pollution Control Loan Program,
The loan applicant’s use of the front-end document package...will help expedite the overall review
of your project’s contract documents.” /d. (emphasis added). A loan applicant’s nonuse of the
TEPA’s sample specifications will not affect the priority given by the Agency to the loan. The IEPA
provided sample documents that could be included with Channahon’s bid specifications to guarantee
compliance with the requirements of the IEPA and USEPA. Channahon was not obliged to use these
documents and had the option of developing its own language subject to review by the IEPA. See
Pl. Ex. C at 28,

Likewise, Channahon had the option of accepting the fair share goals negotiated between the

USEPA and IEPA or developing its own objectives, subject to approval by the IEPA, Strand


minority and women’s businesses are used when possible.” 35 Il]. Admin. Code part 365.620(d)(4).
Furthermore, Channahon was under no obligation to use the sample documents provided by the
IEPA. See Def. Ex. F. The front page of the sample documents reads “[t]he attached front-end
document package may be utilized by the loan applicant to comply with the regulations of the Water
Pollution Control Loan Program ... [and will] expedite the overall review of your project’s contract
documents.” Jd. (emphasis added).'? The evidence indicates that, prior to this litigation, neither the
Village nor its consulting firm, Strand, gave much thought to the DBE requirements and whether
they were required to use the sample provided by the IEPA. Strand employee Jane Carlson
demonstrated that the consulting company and the Village put little, if any consideration into the
issue of minority participation or the need to remedy Channahon’s past discrimination, Neither
Channahon nor Strand conducted any research into whether, and to what extent, Channahon needed
a remedial race-conscious program.'*

We therefore conclude that Bowen has a likelihood of success in establishing that

Channahon’s bid specifications violated the Equal Protection Clause.

% Despite this clear statement, Dolezal contends that he was told by Roger Vollbracht, an
IEPA Project Manager, that Channahon had to use the front-end documents. To the contrary,
Mr. Vollbracht gave deposition testimony that the Village was not obligated to use the sample
documents, but rather was free to develop their own program and submit it to the IEPA for
review. See Pl. Ex. C at 28.

'S Had Channahon put forth greater effort, it could have developed a race-neutral plan that
satisfied the IEPA requirement. Such a plan would have included more accurate fair share
percentages based on empirical evidence concerning minority participation in the relevant
market. See Croson, 488 U.S. at 502. Furthermore, there is no evidence that Channahon
investigated the possibility of using race-neutral solicitation and advertisement requirements to
satisfy the objectives of the IEPA. See Duffy v. Wolle, 123 F.3d 1026, 1030 (8th Cir. 1997)
(upholding recruiting requirement that positions be advertised in a publication of national
circulation to reach all persons who might be interested so as to develop an open, nationwide,
diverse pool of qualified applicants).

18



Bidders can document their efforts in one of three ways. Bidders utilizing smail, minority,
and women’s businesses must submit “letters of intent” signed by the bidder and subcontractor. Art,
28.01.3. Bidders not utilizing small, minority, and women’s businesses must either provide a
complete, signed and notarized certificate attesting that the bidder will award no subagreements in
performance of the contract, see Art. 28.04.1.1, or specific documentation of the bidder’s efforts to
solicit DBEs.° If the bidders do “not receive any inquiries or proposals from qualificd small,
minority, and women’s businesses prior to Bid opening, [they] must provide a written, notarized
certification attesting that no responses or proposals were received.” Art. 28.04.1.8. A bidder’s
failure to submit the appropriate documentation will cause the Village to reject the bid as
nonresponsive. See Art. 28.04.1.10; see also Art. 28.05.1.

Bowen's Bid

On or about June 20, 2002, Bowen became aware that the Village was soliciting bids for the
wastewater construction project. Bowen obtained the bid specifications for the project and made
efforts to comply with the DBE requirements. Bowen placed an advertisement in the Chicago

Tribune on July 15 and July 16, 2002. The Capital Development Board of Illinois compiles a

® Such documentation includes: (1) “certification of publication” or adequate evidence of
proof of publication including an actual copy of the newspaper advertisement from the “key”
newspaper utilized by each’s bidder based upon the project’s locality, Art. 28.04.1.2; (2) names
and contact information of qualified DBEs who submitted proposals to the bidder, 28.04.1.3; (3)
names and contact information of qualified DBEs to be utilized and the names and contact
information for qualified DBEs who submitted proposals to the bidder but will not be utilized, as
well as justification for non-utilization, 28.04.1.4; (4) description of the work to be performed by
the DBEs, including the dollar amount, Art. 28.04.1.5; (5) completed, signed and notarized
certification from the DBEs to be utilized attesting that they are a small, minority, and/or
women’s business as defined by the USEPA, Art 28.04.1.6; and (6) completed, signed, and
notarized certification from the Bidder that it does not have a controlling or dominating interest
or conflict of interest with the DBE that is proposed to be utilized, Art, 28.04.1.7.

8



In sum, Channahon’s wastewater treatment needs, combined with the harms that would be
caused to the Village, Great Midwest, and many Channahon residents outweigh the potential harm
to Bowen.'’ We therefore decline to grant Bowen the extraordinary remedy of a mandatory
preliminary injunction,

TU. Conclusion

For the foregoing reasons, we deny Bowen’s motion for a preliminary injunction. It is so

ordered. Y ;
b

Marvin B-Aspen
Date: 7. /; /Q 3

U.S. District Judge

” Also weighing against Bowen is its four month delay in bringing this suit. Bowen
became aware of Channahon’s bid specifications, including the DBE provisions, in June 2002,
yet Bowen waited until October 2002, after the bidding process had been completed and Great
Midwest had been awarded the bid, to chalienge the plan. Bowen half-heartedly attempted to
comply with the DBE requirements. It did not attempt to challenge the racial classifications
contained in the specifications until its plan was rejected for noncompliance. Had Bowen
challenged the specifications earlier, before the bidding process was completed, it would have
been much easier for this Court to grant Bowen’s injunction,

24


Minute Order Farm (06/97)

United States District Court, Northern District of [linois

This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

CERCP4(m) =O Local Rule 41.1. CIFRCP41(a)(1) C1 FRCP4I(a)(2).

Name of Assigned Judge Marvin Aspen Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 7429 DATE 7/1/2003
CASE Bowen Engincering vs. Great Midwest Contracting
TITLE
[Un the following box (a) indicate the party filing the motion, ¢.g. plaintiff, defendant, 3rd purty plaintifY, and (b) slate briefly the nature
MOTION: of the motion being presented.}
ry
DOCKET ENTRY:
qd) oO Filed motion of [ use listing in “Motion” box above.]
) rief in support of motion due ____
2 o Brief in support of motion d
(3) im] Answer brief to motion due . Reply to answer brief due.
(4) a Ruling/Hearing on set for at
(3) QO Status hearing{held/continued to) [set for/re-set for] on set for al
(6) a Pretrial conference[held/continued to] [set for/re-set for]on_ set for at.
(7) im Trial[set for/re-sct for} on at
(8) o [Bench/Jury trial] [Hearing] held/continued to at
o

(io) [Other docket entry] Enter Memorandum Opinion and Order: Bowen’s motion for a preliminary
injunction is denied. Plaintiffs motion for expedited ruling on preliminary injunction motion (58-1) is
moot.

(11) [For further detail see order attached to the original minute order.}

No notices required, advised in open court.

No notices required. .
ner of natives

‘Dacument
Number

a | Notices mailed by judge's staff.

wUL 0 2 2003

dato dackete

ye.

docketing deputy initials

Notified counsel by telephone.

Docketing to mail notices !

Mail AO 450 form.

Copy to judge/magistrate judge, oy

72003

date suited nuticu

court ges Ub te Wed

GL deputy’s Ge
initials = te
Daehima(pgive ip) wd

central Clerk's Office mailing deputy initiols



merits, (2) irreparable harm if the preliminary injunction is denied, and (3) the inadequacy of any
remedy at law.” Coaper v. Salazar, 196 F.3d 809, 813 (7th Cir. 1999). Once this threshold showing
is made, the Court must balance (4) the harm to the plaintiff if the preliminary injunction were
wrongfully denied against the harm to the defendants if the injunction were wrongfully granted, and
(5) the public interest. See id. The burden on Bowen in this case, however, is even greater. Bowen
seeks a mandatory preliminary injunction, that is, an order requiring an affirmative act by
Channahon. Such injunctions are “cautiously viewed and sparingly issued.” Graham v. Medical
Mutual of Ohio, 130 F.3d 293, 295 (7th Cir. 1997) (citing Jordan yp. Wolke, 393 F.2d 772, 774 (7th
Cir. 1978)). Thus, we can grant Bowen’s mandatory preliminary injunction only “upon the clearest
equitable grounds.” Jd. (citing W.A. Mack, Inc. v. General Motors Corp., 260 F.2d 886, 890 (7th Cir.
1958)).

1. Bowen's Likelihood of Success on the Merits

A, Equal Protection Under the Law

Bowen contends that the Village’s DBE specifications for the construction of the wastewater
treatment plant violate the Equal Protection Clause of the Fourteenth Amendment in that they
establish a racial classification that does not satisfy strict scrutiny. It is uncontroverted that “all
classifications, imposed by whatever federal, state, or local governmental actor, must be analyzed
by a reviewing court under strict scrutiny,” Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227
(1995). Our analysis, therefore, is two-fold. First, we must determine whether the Village’s bid
specifications contained a racial classification. Ifour answer to this question is affirmative, we must

proceed to the second step, strict scrutiny analysis.



Channahon further investigated the matter on August 30, 2002, that it learned that Bowen had
received bids from five DBEs. Because Bowen had submitted a false certification stating that ithad
received no bids from qualified DBEs, and its failure to submit documentation in accordance with
sections 28.04.1,3 and 28.04.1.4, Channahon did not award the bid to Bowen. On September 16,
2002, Channahon awarded the bid to Great Midwest and informed Bowen that it would not be
awarded the bid. That same day, Great Midwest agreed to indemnify Channahon up to $35,000.00
in legal fees in the event the contract was awarded to Great Midwest and Bowen sued Channahon.
Bowen filed the instant suit on October 16, 2002.

IL. Analysis’

A plaintiff seeking a preliminary injunction must show “(1) a likelihood of success on the

5 The Village contends that we should deny Bowen's motion for a preliminary injunction
because Bowen waived or is estopped from challenging the bid specifications. Channahon does
not site one federal case in support of the proposition that an entity waives its constitutional
rights under the Equal Protection Clause by sceking to participate in a potentially discriminatory
system before challenging the constitutionality of that system. We find that Bowen has not
waived its right to challenge the bid specifications and is not estopped from doing do. There are,
however, repercussions from Bowen’s decision to challenge the specifications relative late in the
process. We will consider these repercussions in analyzing the comparative harms to Bowen, the
Village, Great Midwest, and the public.

The Village also contends that Bowen’s allegations constitute an impermissible collateral
attack on federal and state requirements. We do not agrec. With regard to collateral attacks, the
Seventh Circuit has held that “[i]f the state does exactly what the statute expects it to do, and the
statute is conceded for purposes of the litigation to be constitutional, we do not see how the state
can be thought to have violated the Constitution.” Milwaukee Pavers Ass'n v. Fiedler, 922 F.2d
419, 423 (7th Cir. 1991). The USEPA and IEPA gave the Village substantial leeway to tailor its
DBE requirements to its own circumstances and needs. The statute therefore did not dictate that
the Village follow a particular cause of action. The Village chose not to do so, instead simply
adopting the sample documents provided by the IEPA without discussion or debate.
Furthermore, Bowen has not conceded that the underlying statutes are constitutional. We
therefore find that Bowen’s suit is not an impermissible collateral attack.

10



a State or Federal agency” or which “is an independent business concern which is at least 51 percent
owned by a woman or women who also control and operate it.”

The Village’s bid specifications state that the IEPA is committed to establishing an effective
DBE policy which meets the intent of federal guidelines such as 40 C.F.R. 35.3145(d). The purpose
of the policy is to increase DBE participation “by insuring that small, minority, and women’s
businesses are informed of all subcontracting opportunities, and by providing the small, minority,
and women’s businesses and opportunity to submit proposals or quotations.” Art. 28.02.8. With
regard to fair share objectives, the Village’s bid specifications state that:

28.02.9 It is the policy of the State of Minois to award a fair share of subagreements

to small, minority, and women’s businesses. In complying with this requirement,

Bidders or offerers are required to take affirmative steps to assure that small,

minority, and women’s businesses are used when possible as sources of supplies,

equipment, construction, and services explained herein.

28.02.11 As required by the award conditions of USEPA’s Assistance Agreement

with IEPA, the fair share percentages are 2% for MBEs and 11% for WBEs.

The bid specifications outline specific pre-contract award obligations for contractors with
respect to DBEs. For example, bidders must “advertise subcontracting opportunities and to negotiate
with small, minority, and women’s businesses prior to bid opening.” Art. 28.03.1, Bidders are also
required to “contact and encourage the participation of small, minority, and women’s businesses
prior to bid opening. Affirmative efforts (the written record of conscientious and honest
communications between the Bidder and small, minority, and women’s business) must be initiated

and completed by the Bidder prior to Bid opening.” Art. 28.03.3. Bidders must document their

efforts to advertise and otherwise contact DBEs prior to submitting their bid.



Bowen has satisfied the second clement under the preliminary injunction standard: that it will
be irreparably harmed if the preliminary injunction is denied. “When violations of equal protection
rights are alleged in petition seeking injunctive relief, further showing of irreparable injury may not
be required.” Back v. Bayh, 933 F. Supp. 738, 754 (N.D. Ind. 1996). Bowen has also established
that it has no adequate remedy at law. Damages will not make Bowen whole in the event that its

rights to equal protection were violated.

Accordingly, we must now balance the harm to Bowen if the preliminary injunction were
wrongfully denied against the harm to the defendants if the injury wore wrongfully granted, and the
public interest. See Cooper, 196 F.3d at 813. We must also take into account that the relief Bowen

is seeking, a mandatory preliminary injunction, is an extraordinary remedy.

Because we belicve that the balancing of these factors weighs against Bowen, we deny its

motion for a preliminary injunction.

As previously discussed, the harm to Bowen if the injunction is wrongfully denied is the
continued deprivation of its rights under the Equal Protection Clausc. In addition, in the event that
the injunction is wrongfully denied, Bowen will likely be permanently denied the opportunity to
perform work on Channahon’s wastewater treatment facility. While we recognize that these are

serious harms, we belicve they are outweighed by the combined harm to the Village and the public

in the event that the injunction is wrongfully granted.



agrees to certain terms and conditions conceming utilization of Small, Women, and Minority’s
Business Enterprises.”

Under the USEPA requirements, the TEPA must negotiate with the USEPA to develop fair
share goals for DBE participation in environmental construction projects.? The fair share objectives
negotiated by the State and USEPA for FY 2002 were 2% for MBEs and 11% for WBEs. In
developing these goals, the IEPA relied upon a state-wide study conducted in 1997, The Village,
as a recipient of the IEPA loan, had the option of using the state-wide objectives negotiated by the
USEPA and IEPA or determining their own objective, subject to review by IEPA. The aim of the
fair share objectives is to “expand the pool of bidders to include these types of businesses, not to use
tace or ethnicity in the actual decision.” Def. Ex. E at 2. Thus, a recipient of a loan from the IEPA
must publish the fair share objectives, but need not ensure that they objective be satisfied. The
recipient must also make the fair share objectives available to organizations owned or controlled by
socially and economically disadvantaged individuals, women, and historically black colleges and
universities. In addition, the recipient of the loan must include in bid documents the fair share
objectives and must require all its contractors to include in their bid documents for subcontracts the

negotiated fair share percentages.

*For purposes of this opinion, we will use the abbreviation “DBE” (disadvantaged
business enterprise) when referring to Small Business Enterprises (“SBEs”), Minority Business
Enterprises (“MBEs”), and Women’s Business Enterprises (“WBEs”) together. MBE, WBE, and
SBE will be used when there is a distinction between the three or when they appcar in a
quotation.

Tf the State does not wish to rely on these goals it may “submit proposed MBE/WBE
goals based on availability of qualified minority and women-owned businesses to do work in
relevant market for construction, services, supplies, and equipment.” Bowen submission Ex. C.
These fair share objectives are subject to approval by the USEPA.

3



recruitment efforts of stations who had too few women or minorities in their applicant pool. See id.
at 19. The court found that the reporting requirements and potential investigation by the FCC were
“a powerful threat” that al] but compelled stations to hire minorities and women. Jd. The court
further concluded that the FCC's focus on the race and gender of applicants and hires at stations
belied its statement that the only goal of the program was to effectuate outreach. /d. The court
continued on to reject the rcasoning in Allen, stating that “[t]he Commission has designed a rule
under which nonminorities are less likely to receive notification of job openings solely because of
their race; that the most qualified applicant from among those recruited will presumable get the job
docs not mean that people are being treated equally ~ that is, without regard to their race — in the
qualifying round.” /d. at 21, Accordingly, the court found that the program was subject to strict
scrutiny.

The Ninth Circuit also found an outreach program to be a racial classification in Montery
Mechanical Co y. Wilson, 125 F.3d 702 (9th Cir. 1997). Like Channahon’s specifications, the
program at issue in Montery Mechanical required contractors to make good faith efforts to solicit
bids from DBE subcontractors. See id. at 704. Unlike Channahon’s program, however, the plan in
Montery Mechanical excused contractors from the solicitation requirements if they themselves
qualified as a DBE and retained a substantial amount of the work for themselves. See id. The court
found that this element of the affirmative action plan awarded a preference to minority and women-
owned businesses in that they did not have to comply with the minority solicitation requirements
imposed on non-DBEs. See id. at 709. The court further found that the solicitation requirements,
in conjunction with the benefit awarded to minority- and women-owned general contractors,

constituted a racial preference. As the Ninth Circuit explained:

14



The Village cannot show that its DBE requirements were necessary to remedy past efforts.
Channahon often does not use DBE specifications on its projects because the Village seeks to keep
specifications simple and does not believe discrimination in construction is a problem in Channahon.
In the case of the wastewater treatment facility, Channahon included the DBE provisions only
because they believed they were required to do so by the IEPA. Edward Dolezal, Director of Public
Works for the Village, testified that, but for the IEPA regulations, he did not see any “need to have
an MBE/WBE requirement.” PI. Ex. C at 84. Dolezal further stated that he was not aware of any
actions or general patterns by the Village or its representatives that discriminated against the classes
favored by the regulations or made it more difficult for them to big on public works projects in
Channahon. See id. at 103. Moreover, no MBE or WBE contractor has ever lodged a complaint
with the Village regarding its bidding practices, nor have any MBE or WBE contractors ever filed
lawsuits challenging discrimination in the Village's bidding practices. See id. at 110. Channahon
therefore has not established that it had a compelling interest in remedying past discrimination.

Even if Channahon had such an interest, its classification was not narrowly tailored.
Channahon’s specifications were overinclusive in that they included minority groups such as Aleuts
and Eskimos, for which there is no evidence of discrimination in the region surrounding Channahon.
In Croson, the Supreme Court found that “[t]he 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.” Id. at 506.
Channahon’s haphazard inclusion of random minority groups indicates that the Village included the
groups “without attention to whether their inclusion was justified by evidence of past

discrimination.” /d. (citing Drew Days, Fullilive, 96 YAL¥ L. J. 453, 482 (1987)).

16



For the following reasons, we deny Bowen’s motion.

I. Background

The Village of Channahon has experienced population growth in recent years. As a result
of this growth, there has been an increased demand on the Village’s wastewater treatment facilities.
The Village expects that the current facility will be near capacity within the year, and will be at
capacity by March 2004. The Village, therefore, has undertaken a project to expand its wastewater
facilities (“he project”). The Village hired engineering firm Strand Associates, Inc, (“Strand”) to
design the project. Strand was responsible for preparing bid specifications, administering the bid
process, and supervising construction.

The Regulations

To finance the project, the Village obtained a low interest loan through the Illinois
Environmental Protection Agency’s (“IEPA”) Water Pollution Control Board Revolving Loan
Program (“Loan Program”). The United States Environmental Protection Agency (“USEPA”)
provides funding for the TEPA’s Loan Program. The Village contends that, as a condition for
obtaining financing approval for the project, it was required by the State to follow certain regulations
set forth at 35 III. Admin. Code part 365. These regulations are, in turn, required by the terms ofan

agreement between the IEPA and the USEPA. In accepting the grant from the USEPA, the IEPA

between the Village and Great Midwest is void because the contract was entered into in violation
of state and federal law; and (v) for all other relief just and proper. Our denial of Bowen’s
motion for preliminary injunction applics to both Bowen’s main and alternative requests for
relief.


UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS , Ny
EASTERN DIVISION ie ant
Bowen Engineering Corporation, ) \. %
) »
Plaintiff, )
) oe
v. ) No.02C7429 ai?
) A all
Village of Channahon, Illinois, )
)
Defendant, ,)
)
Great Midwest Contracting Corporation, )
)
Intervener. )

MEMORANDUM OPINION AND ORDER
MARVIN E, ASPEN, District Judge:

Presently before us is plaintiff Bowen Enginecring Corporation’s (“Bowen”) motion for a
preliminary injunction. Bowen alleges that defendant, the Village of Channahon (“the Village” or
“Channahon”) violated federal and state law in selecting intervenor Great Midwest Contracting
Corporation (“Great Midwest’), rather than Bowen, to perform certain construction work to expand
a wastewater treatment plan for Channahon. Bowen seeks a preliminary injunction ordering that:
(1) all work on the wastewater project be immediately suspended; (2) the Village rescind the bid
award and contract with Great Midwest; (3) the Village immediately issue to Bowen a notice to

proceed with work on the project; and (4) award all other relief that is just and proper.'

‘In the alternative, Bowen requests the following relief in the form of a preliminary
injunction: (1) an order that Bowen has established the requirements for a preliminary injunction;
(ii) a finding that Bowen has established a reasonable likclihood for success on the merits that
Bowen was the lowest responsible and responsive bidder; (iii) that all work on the Project be
immediately suspended; (iv) a finding that there is a substantial likelihood that the contract

1



i. The Village’s Bid Specifications Contain a Racial Classification
The Village argues that its specifications are a mere outreach program that do not constitute
aracial classification. In support of its argument, the Village relies heavily on a vacated Eleventh
Circuit opinion and a handful of district court opinions from other jurisdictions.”
By contrast, the Sixth, Ninth and District of Colombia Circuits have found that affirmative
action plans that require solicitation and encourage, ifnot mandate, the use of minoritics applicants
constitute racial preferences so as to implicate strict scrutiny. The program at issue in Safeco

Insurance Co y. Cty of White House, 191 F.3d 675 (6th Cir, 1999), was virtually identical to the

° See generally Allen v. Alabama State Bd. of Educ., 164 F.3d 1347, 1352 (11th Cir.
1999) (vacated on joint motion of the parties) (“where the government does not exclude persons
from benefits based on race, but chooses to undertake outreach efforts to persons of one race,
broadening the pool of applicants, but disadvantaging no one, strict scrutiny is generally
inapplicable); Honadle v. University of Vermont and State Agricultural College, 56 F. Supp.2d
419, 428 (D. Ver. 1999)(recognizing a “distinction between ‘inclusive’ forms of affirmative
action, such as recruitment and other forms of outreach, and ‘exclusive’ forms of affirmative
actions, such as quotas, set asides and layoffs); Sussman v. Tanoue, 39 F. Supp.2d 13, 27 (D.
D.C. 1999) (“the program in this case falls within the category of programs, those conscious of
race but devoid of ultimate preferences, which have been consistently upheld by courts”).

There is some indication that the Seventh Circuit might endorse an analysis that the term
“racial classification” does not include race-conscious programs that are devoid of ultimate
preferences. See South-Suburban Housing Center v. Greater South Suburban Bd of Reattors, 935
F.2d 868 (7th Cir. 1991). The South-Suburban court interpreted the Fair Housing Act’s
prohibition against discriminating “because of race,” 42 U.S.C. §3604(a), and section 3604(c)’s
prescription against making any advertisement that “indicate[] any preference, limitation, or
discrimination based on race.” The court found that a corporation’s efforts to attract white home
buyers to regions predominantly populated by African-Americans did not constitute a racial
preference, even though the corporation specifically targeted white home buyers and maintained
lists, by race, of all persons who were shown the property. The central principle behind the
South-Suburban decision was the distinction between mere outreach to members of a particular
race and granting an ultimate preference, Although South-Suburban may demonstrate some
inclination on the part of the Seventh Circuit to agree with the reasoning in Allen, we follow
guidance from the Supreme Court and other circuits dealing with racial preferences under the
Equal Protection Clause, rather than Fair Housing Act.

12



Though worded in terms of goals and good faith, the statute imposes mandatory

requirements with concreteness. The scheme requires distribution of information

only to members of designated groups, without any requirement or condition that

persons in other groups receive the same information. Thus the statute may be

satisfied by distribution of information exclusively to persons in the designated
groups. Bidders in the designated groups are relieved, to the extent they keep the
required percentages of work, of the obligation to advertise to people in their groups.

The outreach the statute requires is not from all equally, or to all equally. /d. at 711.

As in Montery Mechanical, Channahon's bid specifications granted a preference to minority
subcontractors who were solicited by bidders, and disadvantaged non-minority subcontractors who
were not contacted and, perhaps, never Icarned of the subcontracting opportunities. The definition
of “racial classification” to include programs that are devoid of ultimate preferences is supported by
Adarand’s characterization of racial preferences in terms of benefits and burdens because of race.
See 515 U.S. at 222. Although the preference is slight, we conclude that the solicitation
requirements in Channahon’s bid specifications amount to a benefit to minority and women-owed
subcontractors. Furthermore, the mandatory nature of the specifications and the requirement that
bidders justify nonuse of low DBE bidders weigh in favor of a classification.

(ii) Strict Scrutiny

Having found that Channahon’s specifications likely establish a race-based preference, we
must conduct a strict scrutiny analysis. See Croson, 488 U.S. at 493. Under strict scrutiny,
“classifications are constitutional only if they are narrowly tailored measures that further compelling
governmental interests.” Adarand, 515 U.S. at 227. Remedying past discrimination is a compelling
governmental interest where the government entity can “show that it had essentially become a

‘passive participant’ in a system of racial exclusion practiced by elements of the local construction

industry.” Croson, 488 U.S. at 493. The Village of Channahon has not made such a showing.

15