Court Opinion

ID: 9749329
Source: CourtListenerOpinion
Date Created: 2023-08-27 16:34:08.065197+00
Date Added: 2024-06-11T07:25:46.712142
License: Public Domain

RAYE, J.,
Concurring.—For good or ill, in 1996 the electorate saw fit to amend the California Constitution to decree that “[t]he state shall not . . . grant preferential treatment ... on the basis of race, sex, color, ethnicity, or national origin in . . . public contracting.” (Cal. Const., art. I, § 31, subd. (a).) SMUD acknowledges that its preferential treatment policy runs afoul of this constitutional proscription unless it falls within an exception for “action which must be taken to establish or maintain eligibility for any federal program, where ineligibility would result in a loss of federal funds to the State.” (Cal. Const., art. I, § 31, subd. (e).)
We are required to apply the language of the Constitution according to its terms. That task, in my view, is a simple one and is not advanced by the labored analysis proposed by appellants or the creative constitutional commentary offered by our dissenting colleague.
*313As the dissent acknowledges, eligibility for federal programs is determined, in the first instance, by the concerned federal program agency. A challenge to eligibility is ultimately resolved in federal court. Neither we nor any other state court has authority to determine eligibility for a federal program. Consequently, our views on the Byzantine language of federal administrative regulations are of little moment. The pivotal issue is one of fact; Will termination of SMUD’s race-preference policy result in a loss of eligibility for the affected federal program and a consequential loss of federal funds? The resolution of this issue requires information on actions taken by federal administrative and judicial bodies affecting SMUD eligibility.
Appellants have not offered a shred of evidence that termination of SMUD’s race-preference policy will result in a loss of eligibility for a single federal program or a single federal dollar—no evidence, for example, of threats to terminate from federal enforcement officials, no citation to even a single instance where a federal agency has determined an entity ineligible based on a failure to implement racial preferences. Given this evidentiary vacuum, no matter our views on the wisdom of preferential policies, we have little choice but to abide by California’s Constitution and invalidate the SMUD policy, which SMUD admits is otherwise unconstitutional.
The dissent proposes a clever workaround to bridge this evidentiary gap with respect to federal Department of Transportation programs. The dissent’s argument proceeds thusly: SMUD has made findings of past discrimination based on statistical disparities in the award of contracts. Department of Transportation regulations, promulgated pursuant to title VI of the Civil Rights Act of 1964 (42 U.S.C. § 2000d et seq.), require race-conscious affirmative action to redress past discrimination and race-neutral affirmative action to assure that no person is excluded on account of race, color, or national origin. The Department of Transportation has “impliedly” found that SMUD’s preference policy complies with department regulations; it has never informed SMUD that it was out of compliance or that the SMUD policy was unnecessary. Here the dissent takes a sudden, hazardous turn. “Because the regulations require race-conscious programs in some instances [citation], enjoining such a program effectively prohibits what is required by federal regulation.” (Dis. opn., post, at p. 318.) Therefore, the dissent concludes, the trial court order, which we affirm, violates the supremacy clause of the United States Constitution. (U.S. Const., art. VI, cl. 2.)
Clever though it may seem, the dissent’s analysis should be rejected. First, as the majority opinion notes, it comes too late. The parties never raised the issue of preemption in their papers or at oral argument. Moreover, it is otherwise fatally flawed.
*314While acknowledging that only the Secretary of Transportation has authority, in the first instance, to determine whether SMUD is in compliance with Department of Transportation regulations, the dissent undertakes its own dubious interpretation of Department of Transportation regulations.1 It then ascribes this interpretation to the Secretary of Transportation based on the secretary’s silence. Because the secretary “impliedly” approved SMUD’s racial preference policy and because the secretary never informed SMUD the policy was unnecessary, the dissent would have us conclude that termination of the policy would lead to loss of eligibility for federal funding. This Cassandra-like forecast simply is not plausible. There is no reason to believe and certainly no evidence in the record to suggest that the dissent’s views are shared by the secretary, whose views are the only ones that count.
The dissent, however, does offer SMUD a guide to constructing a viable race-conscious policy for awarding contracts where federal funding is involved: It must seek a definitive edict from the appropriate federal program agency that such a policy of racial preference is required in order to maintain eligibility for the affected program. The effect of section 31, subdivision (e) of article I of the California Constitution is to vest in federal bureaucrats, subject to federal judicial review, the authority to determine the validity of California racial preferences. Because SMUD has provided no evidence of such an edict in the present case, it cannot prevail.
I therefore respectfully concur in the majority opinion.
BLEASE, Acting P. J.,
Dissenting.—The majority affirms the trial court’s injunction, which prohibits the Sacramento Municipal Utility District (SMUD) from carrying out its race conscious “Equal Business Opportunity Program” (EBOP), as required by federal regulations. (49 C.F.R. § 21.5(b)(7) (2004).)1 In so doing, it has violated the supremacy clause of the United States Constitution and article 1, section 31, subdivision (e) of the California Constitution (§31).
*315SMUD is the recipient of federal funds from the Department of Transportation (DOT). To qualify for such funds a recipient is mandated by regulation to “take affirmative action to remove or overcome the effects of the prior discriminatory practice or usage.” (§ 21.5(b)(7), italics added.)2 SMUD has done so by filing compliance reports, as required by the federal regulation. (§ 21.9(b) (2004).)3 The Secretary of Transportation (Secretary) is required to determine whether SMUD is in compliance with the regulation and impliedly has done so. (§ 21.11(a) (2004).)4
The federal regulations provide a procedure by which “[a]ny person who believes himself ... to be subjected to discrimination prohibited by this part may . . . file with the Secretary a written complaint” which may result in the suspension or termination of federal assistance. (Respectively, §§ 21.11(b), 21.13(a) (2004).) Plaintiff has not availed itself of this procedure. Nonetheless, the effect of the trial court’s injunction places SMUD in jeopardy of loss of its federal assistance without compliance with the federal regulatory procedure.
The majority rejects the implied findings of the Secretary. Notwithstanding that the DOT is statutorily authorized to promulgate regulations requiring race-conscious affirmative action programs (S.J. Groves & Sons Co. v. Fulton County (11th Circ. 1991) 920 F.2d 752, 764-765) and that part 21.5(b)(7) “condone[s], and in some cases require[s], race-conscious regulations and/or action” (920 F.2d at pp. 764-765), the majority simply reads the term “affirmative action” to refer only to race-neutral programs.5 The majority has simply ignored the text, syntax, and structure of the regulatory language, as well as SMUD’s undisputed findings of fact.
*316Discussion
I
Preemption
Under the supremacy clause of the United States Constitution, federal statutes and regulations preempt conflicting state law. (U.S. Const., art. VI, § 2; see Crosby v. National Foreign Trade Council (2000) 530 U.S. 363, 372 [147 L.Ed.2d 352, 361, 120 S.Ct. 2288].) In determining whether federal law preempts state law, the court’s task is to determine congressional intent. (English v. General Elec. Co. (1990) 496 U.S. 72, 79 [110 L.Ed.2d 65, 74, 110 S.Ct. 2270]; Northwest Central Pipeline Corp. v. State Corporation Commission of Kansas (1989) 489 U.S. 493, 509 [103 L.Ed.2d 509, 527, 109 S.Ct. 1262].) That intent may be express or implied. It is implied when state law directly conflicts with federal law because compliance with federal and state regulations is impossible, i.e. when one prohibits what the other requires. (Florida Lime & Avocado Growers, Inc. v. Paul (1963) 373 U.S. 132, 142-143 [10 L.Ed.2d 248, 257, 83 S.Ct. 1210].)
The injunction issued by the trial court and affirmed by the majority conflicts with federal law because it prohibits what federal law requires. SMUD is a recipient of federal assistance pursuant to its contract with the DOT. As I show in part II, the DOT regulations require SMUD, as a recipient of those funds, to implement a race-based affirmative action program where prior discriminatory usage tends on the grounds of race to exclude individuals from participation in a program funded by the DOT. (§ 21.5(b)(7).) Because it is undisputed6 that SMUD’s board found there had been prior racial discrimination which was not eliminated by race-neutral affirmative action programs used in the past, part 21.5(b)(7) requires that SMUD take race-based “affirmative action to remove or overcome the effects of the prior discriminatory practice or usage.” While the DOT regulations are based upon a system of voluntary compliance (§ 21.9(a) (2004)), they provide several procedural mechanisms to ensure compliance. Every application to the DOT for federal financial assistance to carry out a program must contain or be accompanied by an assurance that the program will be carried out in compliance with part 21. (§ 21.7(a) (2004).) The purpose of part 21 “is to effectuate the provisions of title VI of the Civil Rights Act of 1964 [Title VI] . . . .” (§21.1 (2004).) Recipients of such federal assistance must “submit to the *317Secretary timely, complete, and accurate compliance reports . . . containing such information, as the Secretary may determine to be necessary to enable him to ascertain whether the recipient has complied or is complying with” part 21. (§ 21.9(b).) Recipients also are required to “have available for the Secretary racial and ethnic data showing the extent to which members of minority groups are beneficiaries of programs receiving Federal financial assistance.” (§ 21.9(b).)
The Secretary is required from time to time to “review the practices of recipients to determine whether they are complying with” part 21. (§ 21.11(a).) A third party who believes he or she has been subjected to discrimination prohibited by part 21 may file a written complaint with the Secretary. (§ 21.11(b).) Upon receipt of such a complaint, the Secretary will conduct an investigation “whenever a compliance review, report, complaint, or any other information indicates a possible failure to comply with” part 21. (§ 21.11(c).)
If the Secretary determines no action is warranted, he will notify the recipient and the complainant. If the Secretary determines the recipient has failed to comply, he will inform the recipient and the matter will be resolved informally if possible. (§ 21.11(d).) If the matter cannot be resolved informally and the recipient fails or refuses to comply, the Secretary may effect compliance by suspending or terminating financial assistance after giving the recipient notice and an opportunity for a hearing, mating express findings on the record of a failure to comply with a requirement of part 21, and approving the action upon those findings. (§§ 21.11(c), 21.15.) Action by the Secretary to suspend or terminate financial assistance is subject to judicial review. (§ 21.19; 42 U.S.C. § 2000d-2.)
In light of these regulatory procedures, in the absence of evidence of a ruling by the DOT that part 21.5(b)(7) does not require race-based affirmative action programs or a finding that SMUD’s EBOP is out of compliance with part 21 (or a ruling by a federal court that SMUD’s EBOP is unconstitutional), the majority stands in conflict with part 21.5(b)(7). No such evidence was presented. Moreover, while it does not appear the DOT has ruled on the regulatory construction issue, the Eleventh Circuit has recognized that part 21.5(b)(7) “condone[s], and in some cases require[s], race-conscious regulations and/or action.” (S.J. Groves & Sons Co. v. Fulton County, supra, 920 F.2d at pp. 764-765.) Nor is there anything in the record to show plaintiffs filed a discrimination complaint with the *318Secretary that triggered an investigation or that the Secretary independently conducted an investigation and determined that SMUD’s EBOP fails to comply with the regulations. Because the regulations require race-conscious programs in some instances (ibid.), enjoining such a program effectively prohibits what is required by federal regulation.
As noted, this court does not have the authority to prohibit what federal law requires. (Florida Lime & Avocado Growers, Inc. v. Paul, supra, 373 U.S. at pp. 142-143 [10 L.Ed.2d at p. 257].) Nor does it have the authority to determine whether SMUD is in compliance with the DOT regulations and then terminate SMUD’s federal assistance if it fails or refuses to comply with those regulations. Only the Secretary has the authority to make those determinations, subject to federal judicial review. (§§21.13, 21.19 (2004).) Nevertheless, the majority accomplishes indirectly what it could not do directly. By prohibiting SMUD from taking action that may result in the loss of federal funding, the majority has infringed on the exclusive jurisdiction of the Secretary to determine whether SMUD is out of compliance with the regulations and has placed SMUD in the untenable position of having to refuse to comply with regulations that require it to enforce its EBOP. SMUD will now be caught between a state court injunction prohibiting it from enforcing its EBOP and a possible directive from the Secretary ordering it to take race-based affirmative action or lose its funding.
Section 31, subdivision (e) does not require such an absurd result. It provides that “[n]othing in this section shall be interpreted as prohibiting action which must be taken to establish or maintain eligibility for any federal program, where ineligibility would result in a loss of federal funds to the State.” This exception recognizes the primacy of federal law and the importance of maintaining eligibility for federal funds. (See Ballot Pamp., Gen. Elec. (Nov. 5, 1996) analysis of Prop. 209 by Legislative Analyst) [“The measure provides exceptions to the ban on preferential treatment when necessary . . . [f] [t]o keep the state or local governments eligible to receive money from the federal government.”].) By affirming the injunction issued by the trial court, the majority opinion does just what subdivision (e) was designed to avoid.
By its terms, the operation of subdivision (e) depends on the requirements of federal law. Therefore, a plaintiff who believes he is aggrieved by a race-based affirmative action program and seeks termination of that program must look first to the federal agency under which the affirmative action program is taken. Plaintiffs have not done so despite the fact the regulatory *319system provides an administrative procedure for a third party complaint. (§ 21.11(b).) Nor does this approach give SMUD unfettered discretion to interpret the regulations as it sees fit. SMUD is subject to a plaintiff’s lawsuit for compensatory relief under Title VI and the Fourteenth Amendment (42 U.S.C. § 2000d-7; see Alexander v. Choate (1985) 469 U.S. 287, 293-294 [83 L.Ed.2d 661, 667, 105 S.Ct. 712]; Guardians Ass’n v. Civil Serv. Comm’n (1983) 463 U.S. 582, 607, fn. 27 [77 L.Ed.2d 866, 885, 103 S.Ct. 3221].) As noted, it is also subject to ongoing review by the Secretary for compliance with the antidiscrimination requirements of part 21. (§§21.11, 21.13.)
Accordingly, under the circumstances of this case, a court of this state cannot grant injunctive relief that prohibits enforcement of a race-based affirmative action program taken to maintain eligibility for a federal program, where ineligibility would result in a loss of federal funds, in the absence of a ruling by a federal agency or court that the regulations do not require the program.
n
Race-based Affirmative Action
The majority holds that SMUD’s affirmative action program violates section 31 barring the giving of preferential treatment “on the basis of race . . . .” It concludes the program does not come within the exception of subdivision (e), for actions that “must be taken to establish or maintain eligibility for any federal program . . . .”
At issue are the requirements of the regulations promulgated by the federal DOT, adopted in compliance with Title VI, that requires that SMUD “must take affirmative action to remove or overcome the effects of the prior discriminatory practice or usage” in order to maintain eligibility for the receipt of federal funds. (§ 21.5(b)(7), italics added.)
The relevant DOT regulations are found at part 21.5.7
*320“(a) General. No person in the United States shall, on the grounds of race, color, or national origin be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under, any program to which this part applies.
“(b)... m... m
“(7) This part does not prohibit the consideration of race, color, or national origin if the purpose and effect are to remove or overcome the consequences of practices or impediments which have restricted the availability of, or participation in, the program or activity receiving Federal financial assistance, on the grounds of race, color, or national origin. Where prior discriminatory practice or usage tends on the grounds of race, color, or national origin to exclude individuals from participation in, to deny them the benefits of, or to subject them to discrimination under any program or activity to which this part applies, the applicant or recipient must take affirmative action to remove or overcome the effects of the prior discriminatory practice or usage. Even in the absence of prior discriminatory practice or usage, a recipient in administering a program or activity to which this part applies, is expected to take affirmative action to assure that no person is excluded from participation in or denied the benefits of the program or activity on the grounds of race, color, or national origin.” (§ 21.5, italics added.)
Part 21.5(a) states the general prohibition against discrimination on the grounds of race, while part 21.5(b)(7) states an exception to the prohibition. Part 21.5(b)(7) is composed of three sentences, each of which must be given meaning.
The first sentence states the general exception to race-based considerations, the second sentence states the predicate condition under which affirmative action must be taken and the third sentence states the predicate condition under which affirmative action may be taken.
The regulations do not define the phrase “affirmative action.” However, as noted, the DOT is statutorily authorized to promulgate regulations requiring *321race-conscious affirmative action programs (S.J. Groves & Sons Co. v. Fulton County, supra, 920 F.2d at pp. 764-765) and part 21.5(b)(7) has been recognized to “condone, and in some cases require, race-conscious regulations and/or action.” (920 F.2d at pp. 764-765.) We must also assume, in light of the Secretary’s duty to review SMUD’s practices (§ 21.11(a)), that the DOT is aware SMUD is enforcing a race-conscious affirmative action program. Nevertheless, there is no evidence to suggest the Secretary has found SMUD to be out of compliance with the antidiscrimination regulations of part 21.
We now turn to the regulatory language, following the basic principle of construction that where regulatory terms are not given a specific definition, they are to be interpreted according to their commonly understood definitions, while also considering the context in which the term is used. (Colorado Dept. of Labor & Employment v. U.S. Dept. of Labor (10th Cir. 1989) 875 F.2d 791, 797.)
Under this principle, the term “affirmative action,” as used in part 21.5(b)(7), extends to race-conscious classifications. While the term may include the use of race-neutral programs (see City of Richmond v. J.A. Croson Co (1989) 488 U.S. 469, 507 and 509 [102 L.Ed.2d 854, 890-892, 109 S.Ct. 706] (Croson)), it is commonly understood to mean and may even be considered a commonly understood code for governmental programs that include minority-conscious preferences. (See Kidd v. State of California (1998) 62 Cal.App.4th 386, 392 [72 Cal.Rptr.2d 758] [defining term “affirmative action” as a preference for certain persons].)
However, even if the term includes race-neutral programs, the context in which the term is used in the regulation indicates it is used to include race-based action. The parallel structure and use of the same terms in both the prohibitory and defeasing provisions suggest the affirmative action required by part 21.5(b)(7) is that which is otherwise prohibited in part 21.5(a), namely affirmative action that considers race for the stated purpose of removing or overcoming the consequences of past race-based discrimination.
The text within the defeasing provisions also supports this conclusion. The first sentence, which states that “[t]his part does not prohibit the consideration of race ... if the purpose and effect are to remove or overcome the consequences [of past discrimination based on] race,” is immediately followed by the second sentence requiring that “the applicant or recipient must take affirmative action to remove or overcome the effects of the prior [race-based] discriminatory practice or usage.” (§ 21.5(b)(7).) The use of the term “affirmative action” in the second sentence is clearly a reference to the race-based considerations authorized in the first sentence.
*322Consideration must also be given to the rule of construction that requires this court to give meaning to each word and clause in a regulation. (Spacek v. Maritime Ass’n. (5th Cir. 1998) 134 F.3d 283, 289.) The regulatory requirement of affirmative action stated in the second sentence is conditioned on prior race-based discrimination. Race-conscious affirmative action is permissible under the Fourteenth Amendment only upon a finding of past racial discrimination. (Croson, supra, 488 U.S. at p. 509.) Race-neutral programs do not implicate either the constitutional or the regulatory proscription against racial discrimination. (Ibid.; § 21.5(a).) If the term “affirmative action” in part 21.5(b)(7) referred only to race-neutral remedies, the second sentence would be rendered superfluous.
Moreover, the third sentence of part 21.5(b)(7) states that “[e]ven in the absence of prior discriminatory practice or usage, a recipient ... is expected to take affirmative action to assure that no person is excluded from participation in or denied the benefits of the program ... on the grounds of race . . . .” (Italics added.) This directive is aimed at rectifying present forms of discrimination and does so by requiring that no person be excluded on the grounds of race.
Construing the regulation consistent with the constitution, the term “affirmative action” in the third sentence must refer to race-neutral action. (Croson, supra, 488 U.S. at p. 509 [in the absence of evidence of past discrimination, race-neutral devices may be used to increase accessibility of contracting opportunities to small entrepreneurs of all races].)
Thus, the term “affirmative action” in the defeasing provisions of part 21.5(b)(7) is used to refer to both race-based and race-neutral programs, distinguishing the form of affirmative action by predicating race-based action on past discrimination and race-neutral action on present discrimination. If both directives referred to race-neutral programs, there would be no reason for the regulation to provide different treatment for past and present discriminatory practices. By construing the term “affirmative action” to mean race-based action when preceded by prior racial discrimination, we give meaning to each word and phrase of the regulation.
in
Sufficiency of the Evidence
Although the majority concludes that it need not determine whether the statistical disparities found in SMUD’s studies were sufficient to show past discrimination, it nevertheless concludes those studies were inadequate.
*323The adequacy of those studies is not properly before us. This case comes to us on cross-motions for summary judgment in which the parties stipulated to the undisputed facts. Those facts included SMUD’s findings of prior racial discrimination and that race-neutral affirmative action programs were ineffective to overcome the effects of past racial discrimination. As a result, the adequacy of the disparity studies underlying those findings is not at issue. In this procedural posture, a challenge to the sufficiency of the evidence is limited to a challenge of SMUD’s findings of fact and a determination of the legal question whether those findings are sufficient to satisfy the regulatory requirements. As we show, they are sufficient.
Nevertheless, in the majority’s view, the studies are inadequate because they (1) fail to cite a federal regulation requiring race-based remedies, (2) fail to identify the federal law defining the standard for a factual predicate and (3) fail to establish that race-neutral alternatives are not viable alternatives.
First, the majority concludes the disparity studies failed to cite to a federal regulation or identify a standard for a factual predicate of prior race-based discrimination. The majority fails to cite any authority that requires the presence of any such citation in the study and I fail to see how the absence of a legal citation undermines the sufficiency of the evidentiary findings themselves.
As discussed ante, the regulations require prior race-based discrimination as a factual predicate to a race-based affirmative action program (§ 21.5(b)(7)) and as I show, SMUD made findings of fact sufficient to satisfy the factual predicate.
The undisputed evidence satisfies the requirements of part 21.5(b)(7). SMUD conducted two disparity studies, one in 1993 and another in 1998. SMUD accepted the findings in the 1993 study and found that its outreach and other race-neutral programs had failed to increase participation sufficiently by minority business enterprises (MBE’s) in SMUD’s contracting process.
The SMUD board therefore concluded race-conscious remedial action was required to remedy past discrimination against the groups identified in the study. Based upon the results of the 1993 study, SMUD implemented its EBOP, which set race-conscious goals for utilization of MBE’s and monitored the program from its inception.
In 1998, SMUD commissioned an updated study. After a public comment process, the Board accepted the updated results of the 1998 disparity study. In so doing, the board found “significant disparity exists in the District’s utilization of [MBE’s] when compared to the number of available qualified *324[MBE’s], with respect to dollar expenditure participation in the areas identified. . . . the statistical and anecdotal information collected for the Study provide convincing evidence that the results cannot be attributed to chance. ... the statistical and anecdotal evidence combined provide the factual basis necessary to establish an inference that there has been disadvantage suffered by minority . . . contractors and, therefore, the District has a compelling governmental interest in remediating that disadvantage. ... the District has had an outreach and other race-neutral programs, some of which have been incorporated in the EBOP, in operation since 1990, designed to increase minority and women contracting opportunities, yet the statistics and anecdotal evidence set forth in the Study indicate that these programs, by themselves, have not sufficiently increased participation by minority and women business enterprises in the District’s contracting process to eliminate significant disparity in all areas.” Upon these findings, the Board authorized SMUD’s General Manager to revise the EBOP. That program currently includes “participation goals,” in some cases, “evaluation credits,” outreach and informational assistance, and a good faith exception for contractors who have not met the subcontracting participation goals.
This evidence establishes that SMUD’s prior discriminatory practices8 have had the effect of excluding certain racial minority contractors and subcontractors from participating in their construction contract programs and that race neutral programs were ineffective to eliminate the disparity. Under the terms of part 21.5(b)(7), SMUD is required to take race-based affirmative action to remove or overcome the effects of its prior discrimination.
Since the requirement of “affirmative action” includes both race-neutral and race-conscious action, and the undisputed evidence establishes that SMUD has attempted to use race-neutral outreach and other methods and concluded in good faith that they were not sufficient to remedy the statistical underutilization reflected in the disparity studies, SMUD was left with no other alternative but to adopt a race-conscious remedial plan to eliminate the effects of its own past discriminatory practices.
*325Having determined that it engaged in a practice of past racial discrimination, SMUD is required by DOT regulations to certify its assurance that it has taken race-based affirmative action to overcome or remove the effects of that discrimination. (§ 21.5(b)(7).) It has done so by developing and implementing the EBOP, a plan whose purpose is to remedy the disadvantages suffered by the identified race-based groups of contractors and subcontractors.
I would reverse the judgment with directions to vacate the injunction.
A petition for a rehearing was denied October 13, 2004, and appellants’ petition for review by the Supreme Court was denied December 15, 2004. Werdegar, J., and Moreno, J., were of the opinion that the petition should be granted.

 According to the dissent, the term “affirmative action” may have different meanings within the same section depending on context. While I concede the point as an abstraction, it is difficult to imagine a real-life circumstance where that is so; clearly, the Department of Transportation regulation is not one. This is not a case where the regulatory language is so clear that it admits of only one plausible construction so no reasonable mind could doubt that termination of SMUD’s preferential policy will bring SMUD into conflict with the regulation. Even accepting the plausibility of the dissent’s reading of the regulation, there are other plausible constructions that would not compel race preferences.

 All further section or part references are to 49 Code of Federal Regulations part 21 unless otherwise specified.

 Part 21.5(b)(7) provides, in relevant part: “Where prior discriminatory practice or usage tends, on the grounds of race, color or national origin to exclude individuals from participation in, to deny them the benefits of, or to subject them to discrimination under any program or activity to which this part applies, the applicant or recipient must take affirmative action to remove or overcome the effects of the prior discriminatory practice or usage.”

 Part 21.9(b) provides, in relevant part: “Each recipient shall keep such records and submit to the Secretary timely, complete, and accurate compliance reports at such times, and in such form and containing such information, as the Secretary may determine to be necessary to enable him to ascertain whether the recipient has complied or is complying with this part.” Part 21 is entitled “Nondiscrimination in Federally—assisted Programs of the Department of Transportation—Effectuation of Title VI of the Civil Rights Act of 1964.”

 Part 21.11(a) provides: “The Secretary shall from time to time review the practices of recipients to determine whether they are complying with this part.”

 I agree with the majority’s conclusion that a prior federal adjudication concluding that a race-based program is required to maintain federal funding, is not a prerequisite to the implementation of an affirmative action program under California Constitution section 31, subdivision (e).

 This case comes to us on cross-motions for summary judgment. The parties agreed that application of California Constitution section 31, subdivision (e), to the BBOP is a question of law that may be determined from the undisputed facts. Thus, plaintiffs did not challenge the verity of SMUD’s findings of fact, which were before the trial court as undisputed facts.

 Title VI applies to “any program or activity receiving Federal financial assistance.” (42 U.S.C. § 2000d; Bd. of Public Instruction v. Finch (1969 5th Cir.) 414 F.2d 1068, 1070, fn. 1.) The term “program or activity” is defined broadly to include “all of the operations of [ft] (1)(A) a department, agency, special purpose district, or other instrumentality of a State or of a local government; or [ft] (B) the entity of such State or local government that distributes such assistance . . . .” (42 U.S.C. § 2000d-4a, subd. (1)(A) & (B).) This definition was adopted by the DOT in 2003 when it amended its regulations. (§ 21.23(e) (2004).)
Because the plain language of the statute defines “program or activity” to include all the operations of the state or local governmental entity (D.J. Miller & Associates, Inc. v. Ohio Department of Admin. Services (S.D. Ohio 2000) 115 F.Supp.2d 872, 878), if any part of an *320entity listed in the definition of “program or activity” receives federal funds, the entire entity is covered by Title VI, and must comply with its provisions. (Ibid.; Grimes v. Superior Home Health Care (M.D. Tenn. 1996) 929 F.Supp. 1088, 1091-1092.)
Therefore, as a recipient of federal assistance under its agreement with the DOT, all of SMUD’S operations, including those which are not directly funded by federal funds, are subject to Title VI. (Grimes v. Superior Home Health Care, supra, 929 F.Supp. at pp. 1091-1092.) We may therefore limit our analysis solely to the regulations promulgated by the DOT.

 SMUD need not prove it directly discriminates against MBE’s. The governmental entity need not be an active perpetrator of discrimination; passive participation satisfies strict scrutiny review. (Coral Const. Co. v. King County (9th Cir. 1991) 941 F.2d 910, 916.) The “[m]ere infusion of tax dollars into a discriminatory industry may be sufficient governmental involvement” to establish passive participation. (Ibid.; Croson, supra, 488 U.S. at p. 492.) Thus, it is sufficient to prove the SMUD awards prime contracts to general contractors who discriminate against MBE subcontractors.