Opinion ID: 209534
Heading Depth: 3
Heading Rank: 2

Heading: Other Evidence Before Congress

Text: We now turn to the remaining evidence relied on by the district court to hold that Congress had a strong basis in evidence for reenacting Section 1207 in 2006. Rather than take each item in turn, however, we will organize our discussion by statistical and anecdotal evidence. Ultimately, we will conclude that the remaining statistical evidence is not substantially more probative than that contained in the six disparity studies. 17 The disparity studies analyzed in the Urban Institute Report may themselves be subject to methodological criticism, but we have no need to further consider those studies or the Urban Institute Report itself in this case, and decline to do so. 2008-1017 39 Without strong statistical evidence, the statute cannot be upheld. See Rothe III, 262 F.3d at 1323-24 (“Statistical evidence is particularly important to justify race-based legislation. . . . Indeed, nearly every court of appeals upholding the constitutionality of a race-based classification has relied in whole or in part on statistical evidence.”); Adarand VII, 228 F.3d at 1166 (explaining that “[b]oth statistical and anecdotal evidence are appropriate in the strict scrutiny calculus,” but “anecdotal evidence by itself is not”).
The district court considered statistics presented by USCCR Commissioner Michael Yaki in his dissent to a September, 2005 USCCR study titled “Federal Procurement After Adarand.” For example, the district court noted that although the revenue of minority-owned businesses grew by sixty percent between 1992 and 1997, more than the rate of growth for all United States firms, “the revenue of African American-owned firms grew only half as much as minority-owned businesses generally, and less than all U.S. firms.” Rothe VI, 499 F. Supp. 2d at 865. The court also noted that “[m]inority-owned firms with paid employees were much less likely to survive from 1997 to 2001 than from 1992 to 1996,” and that “African American-owned enterprises were less likely to survive than other groups in either period.” Id. Although this data is national in scope and is therefore in a sense more probative of nationwide discrimination than are municipal disparity studies, the data from Commissioner Yaki’s dissent dates to the early 1990’s. Thus, as the district court recognized, this data is not by itself highly probative of the state of affairs at the time of the 2006 reenactment of Section 1207. See id. at 865 n.107 (“The Court finds that this statistical evidence is not 2008-1017 40 categorically stale, but it is less probative of present-day discrimination than the six state and local disparity studies previously discussed.”). The district court also referred to studies beyond the six disparity studies discussed above, but only in quoting speeches made by members of Congress. For example, in a July 2005 speech made to support the Department of Transportation’s disadvantaged business program, Senator Kennedy stated that “studies completed since 1998 show that minority and women-owned companies are underutilized in government contracting,” and listed studies identified by the Department of Transportation that he alleged show[] significant disparities between the availability and utilization of minority and women-owned firms in government contracting . . . in Nebraska; in Maryland; in Colorado; in Georgia; in Kentucky; in Ohio; in Wilmington, DE; in Dekalb County, GA; in Broward County, FL; in Dallas, TX; in Cincinnati, OH; in Tallahassee, FL; and in Baltimore, MD. Rothe VI, 499 F. Supp. 2d at 869 n.114 (quoting 151 Cong. Rec. S9442-02, at S9443 (Jul. 29, 2005)). These studies themselves, however, are not in the record here, and are not even sufficiently described in this floor excerpt for us to locate them, let alone subject them to “detailed, skeptical, non-deferential analysis.” See Rothe III, 262 F.3d at 1321. Likewise, the district court quoted floor speeches given by Representatives Watt and Menendez in December of 2005, in which they cited, respectively, to “a 2004 disparity study for North Carolina that was performed by MGT America,” and “a New Jersey disparity study by MGT America,” and in which these Representatives concluded that these disparity studies demonstrated underutilization of minority contractors. Rothe VI, 499 F. Supp. 2d at 869. These studies are not in the record, and we cannot defer to Representatives Watt and Menendez about the studies’ probative value, particularly in 2008-1017 41 light of our concerns about the Virginia study by MGT of America discussed above. See Adarand VII, 228 F.3d at 1167 (“We cannot merely recite statements made by members of Congress alleging a finding of discriminatory effects and the need to address those effects . . . .”). We conclude that the remaining statistics cited by members of Congress in the floor speeches quoted by the district court cannot serve as the foundation of a “strong basis in evidence,” because they are not sufficiently probative of nationwide discrimination against the range of minority groups afforded a presumption under Section 1207. Nor are the statistics quoted by the district court from the three SBA reports sufficient, because they do not account for firm size or qualifications. See, e.g., Rothe VI, 499 F. Supp. 2d at 871 (noting that the 2000 State of Small Business Report “found that minority-owned businesses ‘make [up] 9 percent of the business population of the United States, but small minority-owned businesses won just 6 percent of the award dollars in FY 1998 and 1999’”).
Given our holding regarding statistical evidence, we will not review the anecdotal evidence before Congress in detail. Beyond the anecdotal evidence contained in the six municipal disparity studies in the record, the district court discussed floor speeches by members of Congress, in which they related anecdotes submitted by minority business owners concerning their experiences with private sector and state- and citylevel “good old boy” networks and discriminatory government agencies. See Rothe VI, 499 F. Supp. at 866-67. The House Small Business Committee also heard in hearings about the difficulties faced by minority business owners in federal procurement. See id. 2008-1017 42 at 869-71. Rothe contests the accuracy of some of these anecdotes, but we need not make credibility determinations, because anecdotal evidence is insufficient by itself to support Section 1207. Adarand VII, 228 F.3d at 1166. We do pause, however, to consider that while the district court cited complaints about “slow payment by government agencies,” and “the effects of contract bundling in continuing the disparities of contracts awarded to minority business contractors,” Rothe VI, 499 F. Supp. 2d at 870, and cited the Small Business Committee’s conclusion that “much work remains to be done” in “increasing access to capital and federal procurement markets for minority entrepreneurs,” id., neither the district court in its opinion, nor DOD on appeal, cited to a single instance of alleged discrimination by DOD in the course of awarding a prime contract, nor to a single instance of alleged discrimination by a private contractor identified as the recipient of a prime defense contract. This lacuna is quite significant. Justice O’Connor wrote in Croson that if a government has become “a ‘passive participant’ in a system of racial exclusion practiced by elements of the local construction industry,” then that government may take “affirmative steps to dismantle” the exclusionary system. 488 U.S. at 492. Here, the district court concluded that DOD “is a ‘passive participant’ in a system of racial exclusion practiced by elements of various state and local contracting sectors because the Government has compiled evidence of marketplace discrimination and linked its spending practices to that private or public discrimination.” Rothe VI, 499 F. Supp. 2d at 827 (citing Concrete Works, 321 F.3d at 976). But without a single identified incident of discrimination by DOD or a recipient of DOD funds, the only evidence recited by the 2008-1017 43 district court to establish a link between DOD’s spending practices and discrimination is the fact that DOD “is one of the largest buyers of goods and services in the world,” having procured “approximately $268 billion of goods and services in fiscal year 2005, with much of that money being distributed to state and local contractors.” Rothe VI, 499 F. Supp. 2d at 827. Undoubtedly, some state and local contractors have engaged in discrimination. And given the amount of money spent by DOD, it is likely that some money injected by DOD into the nationwide contract market has made its way into the hands of contractors, subcontractors, or sub-subcontractors who have engaged in discrimination. But we are skeptical that this bare likelihood would be sufficient to establish DOD’s “passive participation” in discrimination within the meaning of Croson, even if—unlike the present case—Congress were to possess a strong evidentiary basis upon which to conclude that there was a nationwide pattern or practice of pervasive discrimination by state, local, and private contractors in the relevant contract markets at the relevant time. Even in Concrete Works, for example, the City of Denver offered more than mere dollar amounts to link its spending to private discrimination. As the Tenth Circuit explained, Denver provided testimony from minority business owners that “general contractors who use them in City construction projects refuse to use them on private projects,” with the result that Denver had “pa[id] tax dollars to support firms that discriminate against other firms because of their race, ethnicity, and gender.” Concrete Works, 321 F.3d at 976-77. We do not know whether, in the present case, DOD could have obtained similar testimony from minority-owned subcontractors at the relevant time, only that DOD did not do so. 2008-1017 44 To conclude our compelling interest analysis, we hold that Congress did not have before it, at the time of the 2006 reenactment of Section 1207, a “strong basis in evidence” for the proposition that DOD was a passive participant in racial discrimination in relevant markets across the country and that therefore race-conscious remedial measures were necessary. We stress that our holding is grounded in the particular items of evidence offered by DOD and relied on by the district court in this case, and should not be construed as stating blanket rules, for example about the reliability of disparity studies. As the Fifth Circuit has explained, there is no “precise mathematical formula to assess the quantum of evidence that rises to the Croson ‘strong basis in evidence’ benchmark.” W.H. Scott Constr. Co., 199 F.3d at 218 n.11. Rather, “[t]he sufficiency of a [government’s] findings of discrimination in a local industry,” or for that matter in a state-wide or nationwide industry, “must be evaluated on a case-by-case basis.” Id. Thus, if Congress reenacts Section 1207 again before it is set to expire in 2009—as Congress is free to do—we cannot now predict, nor do we intend to prejudge, whether any such new enactment will be supported by a “strong basis in evidence.” 3. Narrow Tailoring Because we hold that Congress lacked the evidentiary predicate for a compelling interest, we cannot determine whether Section 1207, as reenacted in 2006, is narrowly tailored to a compelling interest. We make two observations about narrow tailoring, however. First, we held in Rothe III that the district court in Rothe I had “thoroughly analyzed and correctly concluded that the 1207 program was flexible in application, limited in duration, and that it did not unduly impact on the rights of third parties.” 262 2008-1017 45 F.3d at 1331. We have no occasion to revisit that holding today, but note that Section 1207 and pertinent regulations have been amended over time, and that the amendments have tended to limit, rather than broaden, the application of preferences based on racial classifications. Second, even if we were to reach the other narrow tailoring factors, the absence of strongly probative statistical evidence makes it impossible to evaluate at least one of those factors. Without solid benchmarks for the minority groups covered by the statute, we simply cannot determine whether Section 1207’s five percent goal is reasonably related to the capacity of firms owned by members of those minority groups—i.e., whether that goal is comparable to the “share of contracts minorities would receive in the absence of discrimination.” J.A. at A777 (USCCR Disparity Studies, supra note 7, at 66). Such benchmarks might have been available here, had the Department of Commerce made good on its 1999 intention to “develop new benchmarks and utilization estimates every three years.” See supra note 2. But Commerce did not do so. See J.A. at A779 (USCCR Disparity Studies, supra note 7, at 68).