UNITED STATES COURT OF APPEALS For the Fifth Circuit

No. 97-20619

HOUSTON CONTRACTORS ASSOCIATION; BEYER CONSTRUCTION, Beyer Construction, Inc.,

Plaintiffs - Appellees,

versus

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY; ET AL.,

Defendants,

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY,

Defendant - Appellee,

versus

UNITED STATES OF AMERICA; U. S. DEPARTMENT OF TRANSPORTATION; FEDERAL TRANSIT AUTHORITY,

Movants - Appellants,

____________________________________

KOSSMAN CONTRACTING COMPANY INCORPORATED,

Plaintiff-Appellee,

versus

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY; ET AL.,

Defendants,

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY,

Defendant-Appellee,

versus

UNITED STATES OF AMERICA; U.S.DEPARTMENT OF TRANSPORTATION;

FEDERAL TRANSIT AUTHORITY,2

Movants-Appellants,

_________________

Case No. 98-20002

_________________

HOUSTON CONTRACTORS ASSOCIATION; BEYER CONSTRUCTION, Beyer Construction, Inc.,

Plaintiffs-Appellees,

versus

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY; ET AL.

Defendants,

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY,

Defendant-Appellant,

MENENDEZ-DONNELL & ASSOCIATES INCORPORATED,

Intervenor-Appellant,

________________________________

KOSSMAN CONTRACTING COMPANY INCORPORATED

Plaintiff - Appellee,

versus

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY; ET AL

Defendants,

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY,

Defendant - Appellant,

and

MENENDEZ-DONNELL & ASSOCIATES INCORPORATED,

Intervenor - Appellant,* Pursuant to 5 TH C IR

. R . 47.5, the Court has determined that

this opinion should not be published and is not precedent except under the limited circumstances set forth in 5 TH C IR . R. 47.5.4.

3 _________________

Case No. 98-20021

_________________

HOUSTON CONTRACTORS ASSOCIATED; ET AL.,

Plaintiffs,

HOUSTON CONTRACTORS ASSOCIATION,

Plaintiff - Appellee,

versus

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY; ET AL,

Defendants,

METROPOLITAN TRANSIT AUTHORITY OF HARRIS COUNTY,

Defendant - Appellant,

Appeals from the United States District Court for the Southern District of Texas

(H-93-CV-3651)

June 28, 1999

Before POLITZ, HIGGINBOTHAM, and DAVIS, Circuit Judges.

DAVIS, Circuit Judge: *

Houston Contractors Association (HCA) filed this suit against

Metropolitan Transit Authority of Harris County, Texas (METRO), a

public agency, to challenge METRO’s disadvantaged business

enterprise (DBE) program as unconstitutional. The United States

sough t to intervene in the suit on grounds that the suit called4

into question the validity of the Intermodal Surface Transportation

Effic iency Act of 1991 (ISTEA) and the Department of

Transportation’s implementing regulations. The district court

denied the government’s motion to int ervene. The district court

later granted HCA’s motio n for summary judgment and permanently

enjoined METRO from administering its DBE program. The court also

entered an order awarding HCA $917,724.24 in attorneys’ fees and

costs. We vacate these orders and remand this case to the district

court for further proceedings.

I.

The district court enjoined METRO’s en tire DBE program.

METRO’s program was financed in part by federal funds. The federal

regula tions conditioned the receipt and use of these funds upon

compliance with the federal DBE program. The federal regulations

only required application of the federal DBE program to contracts

funded in whole or in part by federal funds. METRO applied its DBE

program not just to those federally funded contracts, but to all

METRO contracts.

The United States argues that the district court should have

allowed it to intervene in this lawsuit pursuant to FRCP 24(a)(1)

and 28 U. S.C. § 2403(a), which provide the United States with an

unconditional right to intervene in any lawsuit that challenges the

constitutionality of a federal law. S ee Fuel Oil Supply &

Terminaling v. Gulf Oil Corp

., 762 F.2d 1283, 1286 n. 5 (5th Cir.

1985). The United States insists that it had the unconditional

r ight to intervene because this lawsuit called into question the5

constitutionality of the federal DBE program provided for by ISTEA

and its implementing regulations, pursuant to which METRO received

federal funds.

HCA counters that it never challenged a federal statute; it

simply challenged a local affirmative action program. Therefore,

it never called ISTEA or its regulations into question, so FRCP

24(a)(1) and 28 U.S.C. § 2403(a) do not apply.

The statute does not require METRO to accept the federal funds

and, by doing so, to become subject to federal DBE guidelines. But

the federal statute authorizes METRO to accept the funds on that

condition, “and action pursuant to a valid authorization is valid.”

Milwaukee County Pavers Ass’n v. Fiedler

, 922 F.2d 419, 423 (7th

Cir. 1991). We agree with the government that to the extent that

HCA attacked the portion of METRO’s program that assigns DBE

percentage goals to contracts financed in whole or in part with

federal funds, HCA attacked ISTEA and its implementing regulations.

Consequently, the district c ourt should have allowed the United

States to intervene under FRCP 24(a)(1) and 28 U.S.C. § 2403(a).

Bec ause the district court erred by not permitting the

intervention, the summary judgment is vacated and the case remanded

insofar as the judgment enjoined the DBE program as applied to

contracts financed in whole or in part by federal funds. On

remand, the U nited States should be allowed to intervene and

participate in the case. S ee Marshall v. Local 299

, 617 F.2d 154,

156 (6th Cir. 1980); Miam i Health Studios, Inc. v. City of Miami

Beach , 491 F.2d 98, 100 (5th Cir. 1974).6 II.

We turn next to the chall enge to the portion of the summary

judgment declaring the DBE program unconstitutional as applied to

non-federally funded contracts.

METRO’s affirmative action pro gram should be analyzed under

the strict scrutiny standard. Under strict scrutiny, affirmative

action programs pass constitutional muster if they are narrowly

tailored to serve a compelling interest. S ee Adarand Constructors,

Inc. v. Pena

, 515 U.S. 200, 227 (1995). The judicial inquiry into

compelling interest is different when a local entity, rather than

Congress, utilizes a racial classification. While Congress has the

authority to address problems of nationwide discrimination with

legislation that is nationwide in application, see City of Richmond

v. Croson

, 48 8 U.S. 469, 504 (1989), a state or local government

has only “the authority to eradicat e the effects of []

discrimination within its own legislative jurisdiction.” I d. at

491-92. Thus, in analyzing the purely local component of METRO’s

DBE program, the question to be resolved is whether METRO crafted

a narrowly tailored program to se rve the compelling interest

presented in its locality.

Preliminarily, however, this court will not affirm a summary

judgment unless it is “convinced, after an in dependent review of

the record, that there is no genuine issue as to any material fact

and that the movant is entitled to judgment as a matt er of law.”

Clay v. FDIC

, 934 F.2d 69, 71 (5th Cir. 1991) (quotation marks and

c itations omitted). If any material facts are disputed, summary7

judgment is improper, and it is not the function of this court to

weigh the evidence or resolve material fact disputes. See id.

Our review of the summary judgment record reveals a sharp

conflict regarding how METRO’s DBE pr ogram operates in practice.

According to METRO’s evidence, its DBE program is an outr each

program instituted to reach DBE participation goals. That is, all

that is required of the contractors is that they contact DBEs and

give them an opportunity to bid as subcontractors on the project.

HCA’s witnesses, on the other hand, contend that METRO coerced

prime contractors int o using race and sex in selecting

subcontractors as a condition to securing METRO contracts. HCA

contends that the participation percentages were not “goals”; they

require contractors to meet a coercive quota. Moreover, according

to HCA, once it receives a METRO contract, if a prime contractor

does not satisfy METRO’s DBE requirements during the course of the

project, it faces serious repercussions.

It is clear from the district court’s order that it based its

decision on HCA’s version of the facts--that Metro’s affirmative

action plan was a coercive quota program. The summary judgment

record contains genuine issues of material fact that preclude this

view of the program. We therefore vacate the summary judgment

declaring Metro’s DBE program unconstitutional as applied to nonfederally funded contracts. We also vacate the injunction

predicated on this conclusion. We remand this case to the district

court for further proceedings consistent with this opinion.

VACATED and REMANDED.8