Freeman v. Motor Convoy, Inc. Brief for the Union Defendants-Appellees

    No. 78-1007

In %  £>tqirma (Emtrt nf %  Mnttafc
October Term , 1979

H. E arl F ullilove, et al., petitioners

v.

J uanita  M. Kreps, Secretary of Commerce, et al.

ON W RIT  OF CERTIORARI TO THE UNITED S T A T E S  
COURT OF A P P E A LS FOR THE SECOND CIRCUIT

BRIEF FOR THE SECRETARY OF COMMERCE

Wade H. McCree, Jr.
Solicitor General

Drew S. Days, III
Assistant Attorney General

Lawrence G. Wallace 
Deputy Solicitor General

Peter Buscemi
Assistant to the Solicitor General

Brian K. Landsberg 
Jessica Dunsay Silver 
Vincent F. O’Rourke, Jr.

Attorneys
Department of Justice 
Washington, D.C. 20530



I N D E X
Page

Opinions below ................................................... 1
Jurisdiction ......................................................... 1
Question presented..... .......................................  2
Statement ........................................................... 2
Summary of argument .....................................  13
Argument ...............    19

The minority business enterprise provi­
sion of the Public Works Employment Act 
of 1977 does not violate the Fifth Amend­
ment or Title VI of the Civil Rights Act 
of 1964 ....................................................... 19
A. Congress has broad authority to rem­

edy the effects of past discrimination 
through the exercise of the spending 
power and the powers conferred by 
the enforcement sections of the Thir­
teenth and Fourteenth Amendments- 19

B. Congress concluded that legislative
action was necessary to eliminate the 
effects of discrimination in the con­
struction industry .............................  26

C. The MBE provision is a constitution­
ally permissible means by which Con­
gress may seek to eliminate the ef­
fects of discrimination in the con­
struction industry...............................  51



II

D. The minority business enterprise pro­
vision does not violate Title VI of the 
Civil Rights Act of 1964 ...................  69

Conclusion ........................................................... 70
Appendix ............................................................. la

Argument—Continued Page

CITATIONS
Cases:

Albemarle Paper Co. v. Moody, 422 U.S.
405 .......................................................15,23,56

Araya v. McLelland, 525 F.2d 1194 ___  70
Associated General Contractors of Mass.,

Inc. v. Altshuler, 490 F.2d 9, cert, de­
nied, 416 U.S. 957 .......... ............. ........  38

Brown v. Board of Education, 347 U.S.
483 ...........................................................  22

Buckley v. Valeo, 424 U.S. 1 .......... ..........  19
Califano v. Goldfarb, 430 U.S. 199 .... . 32
Califano v. Webster, 430 U.S. 313 ...........  32, 57
California Bankers Ass’n v. Shultz, 416

U.S. 21 ........    19
Contractors Ass’n of Eastern Pennsyl­

vania v. Secretary of Labor, 442 F.2d
159, cert, denied, 404 U.S. 854 ..... .....  38

Constructors Ass’n of Western Pennsyl­
vania v. Kreps, 441 F. Supp. 936, affd,
573 F.2d 811 ........................... ..... 34, 50-51, 69

Craig v. Boren, 429 U.S. 190 ...................  57
EEOC v. American Telephone & Tele­

graph Co., 556 F.2d 167, cert, denied,
438 U.S. 915 ..........     57

EEOC v. Local 638, Sheet Metal Workers,
532 F.2d 821 13



Cases—Continued
in

Page
Franks v. Bowman Transportation Co.,

Gaston County v. United States, 395 U.S.
285 -.......................................................... 23, 57

General Pictures Corp. v. Western Elec­
tric Co., 304 U.S. 175 .......... ................  60

Griggs v. Duke Power Co., 401 U.S. 424.. 24
Heart of Atlanta Motel v. United, States,

379 U.S. 241 ....... ............... .................  31
Helvering v. Davis, 301 U.S. 619.............  19, 20
Johnson v. Railway Express Agency, Inc.,

421 U.S. 454 ...........................................  20
Jones v. Alfred H. Mayer Co., 392 U.S.

409 ......................    20
Katzenbach v. Morgan, 384 U.S. 641....20, 24, 25,

31, 52, 61, 68
Lau v. Nichols, 414 U.S. 563 .................. . 19, 23
Lawn v. United States, 355 U.S. 339 .......  60
McCulloch v. Maryland, 17 U.S. (4

Wheat.) 316 ...............       52
Morton v. Mancari, 417 U.S. 535 ......... 18, 69, 70
Nixon v. Administrator of General Serv­

ices, 433 U.S. 425 ................... .............  61
Perkins v. Lukens Steel Co., 310 U.S. 113.. 19
Oklahoma v. Civil Service Commission,

330 U.S. 127 ............... ............... .........  19
Oregon v. Mitchell, 400 U.S. 112 ....... ..25, 28, 57
Regents of the University of California v.

Bakke, 438 U.S. 265 ______   passim
Rhode Island Chapter, Associated General 

Contractors of America v. Kreps, 450
F. Supp. 338 .......................... ...... .......  34, 38

Runyon v. McCrary, 427 U.S. 160 .........  20
Schlesinger v. Reservists Committee to

Stop the War, 418 U.S. 208 __ ____  27



Cases—Continued
IV

Page
29SEC v. Chenery Corp., 318 U.S. 8 0 .........

South Carolina v. Katzenbach, 383 U.S.
301 .................. .......................... .............. 68

Steelworkers v. Weber, Nos. 78-432, 78-
435, 78-436 (June 27, 1979) ........... 38,59,61

Teamsters v. United States, 431 U.S. 324.. 23-24 
Tillman v. Wheaton Haven Recreation

Ass’ll, 410 U.S. 431 _______ ____ _ 20
United Jewish Organizations v. Carey,

430 U.S. 144 _____________ __15, 23, 25, 58
United States v. Guest, 383 U.S. 745 __  20
United States v. Ironworkers Local 86, 443 

F.2d 544, cert, denied, 404 U.S. 984.... 38
United States v. Masonry Contractors

Ass’n of Memphis, 497 F.2d 871 ____  38
Village of Arlington Heights v. Metropoli­

tan Housing Development Corp., 429 
U.S. 252 ....... ............... .................. ......  31

Constitution, statutes, and regulations:
United States Constitution:

Article I __________ ____ ____ 15, 28, 31
Fifth Amendment ..... .............. ........  2, 7
Thirteenth Amendment _____ 14, 19, 20, 36
Fourteenth Amendment __ 7, 14, 19, 20, 24,

25, 36
Civil Rights Act of 1957, Pub. L. No. 85- 

315, 71 Stat. 634 _______ ___ _____ _ 22
Section 131, 42 U.S.C. (1958 ed.)

1971(b)-(e) 22



V

Civil Rights Act of 1964, Pub. L. No. 88- 
352, 78 Stat. 241, 42 U.S.C. 2000a et 
seq.................      22

Title VI, 42 U.S.C. 2000d et seq......2, 7,18,
19, 21, 35, 41, 45, 54, 69, 70

Title VII, 42 U.S.C. 2000e et seq...... ..7, 22,
35, 54

Comprehensive Employment and Training-
Act of 1973, 29 U.S.C. 991 ...................  21

Energy Conservation and Production Act,
42 U.S.C. 6870 ....................................... 21

Equal Credit Opportunity Act, Pub. L.
No. 93-495, 88 Stat, 1521, 15 U.S.C.
1691 et seq. .............................. ......... . 22, 54

Equal Credit Opportunity Act Amend­
ments of 1976, Pub. L. No. 94-239, 90
Stat. 251 ____       22

Equal Employment Opportunity Act of
1972, Pub. L. No. 92-261, 86 Stat. 103.. 22

Fair Housing Act of 1968, Pub. L. No. 90-
284, 82 Stat. 81-90 _____ ___ ______  22

Housing and Community Development Act 
of 1974, 42 U.S.C. 5309 ....................... 21

Constitution, statutes, and
regulations—Continued Page

Local Public Works Capital Development 
and Investment Act of 1976, and as 
amended by the Public Works Employ­
ment Act of 1977, Pub. L. No. 95-28, 
91 Stat. 116-120, 42 U.S.C. (and Supp. 
I) 6701 et seq.:

42 U.S.C. 6701 ............. .....................  2
42 U.S.C. (Supp. I) 66701 ...............  3
42 U.S.C. 6701-6710 ........................... 2



VI

42 U.S.C. 6705(d) ............................  4,55
42 U.S.C. (Supp. I) 6705(e)(1) .....  4
42 U.S.C. (Supp. I) 6705(f)(2) ..... 'passim
42 U.S.C. (Supp. I) 6705-6708 .........  3
42 U.S.C. (and Supp. I) 6706 ...........  4, 55
42 U.S.C. (Supp. I) 6707(h) ...... . 55
42 U.S.C. 6709 .... ................ ...... ......  45, 69
42 U.S.C. (Supp. I) 6710.................  3

Public Works Employment Act of 1977,
Pub. L. No. 95-28, 91 Stat. 116-120 ...... 3

Public Works Employment Appropriations 
Act, Pub. L. No. 94-447, 90 Stat. 1497.. 2, 55

Small Business Act of 1958, Pub. L. No.
85-536, 72 Stat. 384, 15 U.S.C. 631 et 
seq.:

Section 2(e) (to be codified in 15
U.S.C. 631(e)) ...............      66

Section 8(a), 15 U.S.C. 637(a)  ..... . 41
Section 8(d), 15 U.S.C. 637(d)  ...... 66

State and Local Assistance Amendments
of 1976, 31 U.S.C. 1242 .......... ..............  21

Voting Rights Act of 1965, Pub. L. No.
89-110, 79 Stat. 437, 42 U.S.C. (1964 
ed., Supp. I ll)  1971 et seq.....................  22

42 U.S.C. (1964 ed., Supp. I ll)  1973- 
1973p ______        22

Voting Rights Act Amendments of 1970,
Pub. L. No. 91-285, 84 Stat. 314 .........  22

Voting Rights Act Amendments of 1975,
Pub. L. No. 94-73, 89 Stat. 400 ..........  22

Constitution, statutes, and
regulations—Continued Page



VII

Pub. L. No. 95-507, 92 Stat. 1757-1773:
Section 201, 92 Stat. 1760 .................  66
Section 211, 92 Stat. 1767-1770 .......  66

91 Stat. 122............................... .............. _. 55
91 Stat. 123-124 ...................................... 2
15 U.S.C. 694a ....... ...... ............. ..............  54
15 U.S.C. 694b ____ ____ ________ _ 54
42 U.S.C. 1975c(b) ........................... . 36
42 U.S.C. 1981 ......... ..... ............. 7, 21, 36, 41, 54
42 U.S.C. 1983 ............ ....... ........ ..........  7
42 U.S.C. 1985 .......       7
13 C.F.R. 317.19(b) ........       4
13 C.F.R. 317.19(b) (2) ........   3
13 C.F.R. 317.30 ........      55
13 C.F.R. 317.35(j) .................................  5
13 C.F.R. 317.74(e) .......      55
41 C.F.R. 1-1.1302 ......      33,41
41 C.F.R. 1-1.1303 .............      33
41 C.F.R. 1-1.1310-2 ........      33
41 C.F.R. 60-2.11 (b)(1) .........................  63

Miscellaneous:
1972 Census of Construction Industries,

United States Summary—Statistics for 
Construction Establishments With and 
Without Payrolls (August 1975) .......  38, 39

122 Cong. Rec. (1976) :
p. 13866 ........................................   35
p. 34754 .............................................  36

123 Cong. Rec.:
p. H1423 (daily ed. Feb. 24, 1977).... 33, 48 
p. H1436 (daily ed. Feb. 24, 1977).... 45

Constitution, statutes, and
regulations—Continued Page



VIII

PP- H1436-H1437 (daily ed. Feb. 24,
1977)  ..........  46

p. H1437 (daily ed. Feb. 24, 1977).... 47
pp. H1437-H1438 (daily ed. Feb. 24,

1977) ...............................................  48
p. H1440 (daily ed. Feb. 24, 1977).... 47, 48 

pp. H1461-H1462 (daily ed. Feb. 24,
1977) ...............................................  48

p. S3910 (daily ed. Mar. 10, 1977).... 33
pp. S3926-S3929 (daily ed. Mar. 10,

1977) ...............................................  49
pp. S6755-S6757 (daily ed. Apr. 29,

1977) ....................       49
pp. H3920-H3935 (daily ed. May 3,

1977) .......        49
124 Cong. Rec. E985 (daily ed. Mar. 2,

1978)         35.36
Cox, Foreword: Constitutional Adjudica­

tion and the Promotion of Human 
Rights, 80 Harv. L. Rev. 91 (1966).... 52

Exec. Order No. 11,246, 30 Fed. Reg.
12319 (1965), as amended by Exec.
Order No. 11,375, 32 Fed. Reg. 14303 
(1967), and Exec. Order No. 12,086, 43
Fed. Reg. 46501 (1978) .......................  63

Exec. Order No. 11,458, 34 Fed. Reg. 4937 
(1969), as amended by Exec. Order No.
11,625, 36 Fed. Reg. 19967 (1971) ...... 41

35 Fed. Reg. 11595 (1970) .......................  23

Miscellaneous—Continued Page



IX

Government Minority Enterprise Pro­
grams—Fiscal Year 197U: Hearings 
Before the Sub comm, on Minority Small 
Business Enterprise and Franchising of 
the House Permanent Select Comm, on 
Small Business, 93d Cong., 1st Sess.
(1973)  ...................... ............ .........  34

Government Minority Small Business Pro­
grams: Hearings Before the Subcomm. 
on Minority Small Business Enterprise 
of the House Select Comm, on Small 
Business, 92d Cong., 1st Sess. (1971).. 34

H.R. 11 , 95th Cong., 1st Sess. (1977) __  48
H.R. Conf. Rep. No. 95-230, 95th Cong.,

1st Sess. (1977) ........ ............ ....... .......  49
H.R. Rep. No. 94-468, 94th Cong., 1st

Sess. (1975) ........... ....... ............. .........  34,37
H.R. Rep. No. 94-1791, 94th Cong., 2d

Sess. (1977) .....................................   36,41
H.R. Rep. No. 95-20, 95th Cong., 1st Sess.

(1977) ....................     32
Minorities and Women as Government 

Contractors, A Report of the United 
States Commission on Civil Rights
(May 1975) ..............     .....’....36-37,63

Minority Business Development Adminis­
tration: Hearings Before the Minority 
Subcomm. on Intergovernmental Rela­
tions of the Senate Comm, on Govern­
ment Operations, 94th Cong., 2d Sess.
(1976) ...........................................     35,36

Miscellaneous—Continued Page



Miscellaneous—Continued
x

Minority Enterprise and Allied Problems 
of Small Business: Hearings Before the 
Subcomm. on SBA Oversight and Mi­
nority Enterprise of the House Comm, 
on Small Business, 94th Cong., 1st Sess.
(1975) ______________ ___________  34

Monaghan, Foreword: Constitutional Com­
mon Law, 89 Harv. L. Rev. 1 (1975)..,. 53

Public Works Employment Act of 1977: 
Hearings Before the Subcomm. on Re­
gional and Community Development of 
the Senate Comm, on Environment and 
Public Works, 95th Cong., 1st Sess.
(1977) _______ .____ ___ __________  33

Review of Small Business Administra­
tion’s Programs and Policies—1971: 
Hearings Before the Senate Select 
Comm, on Small Business, 92d Cong.,
1st Sess. (1971) __________ _______  34

B. Schwartz, Statutory History of the
United States— Civil Rights (1970) .... 22

S. Conf. Rep. No. 95-110, 95th Cong., 1st
Sess. (1977) .................... ......... ...... . 49

S. Rep. No. 95-38, 95th Cong., 1st Sess.
(1977) _____ ____ ______ __________  32

1972 Survey of Minority-Owned Business 
Enterprises, Minority-Owned Businesses
(May 1975) ................ ....... ............. ...... 39

The Effects of Government Regulations 
on Small Business and the Problems of 
Women and Minorities in Small Busi­
ness in the Southwestern United States: 
Hearings Before the Senate Select 
Comm, on Small Business, 94th Cong.,
2d Sess. (1976) ..................................... 34, 38

Page



XI

Miscellaneous—Continued
To Amend and Extend the Local Public 

Works Capital Development and Invest­
ment Act: Hearings Before the Sub- 
comm. on Economic Development of the 
House Comm, on Public Works and 
Transportation, 95th Cong., 1st Sess.
(1977) ........................................ ....... 43,44,45

13 Weekly Corap. of Pres. Doc.:
p. 511 (Apr. 8, 1977) ......... .............  53
p. 1333 (Sept. 12, 1977) ................... 51



In %  j^upran? (Lmxrt nf tltt> TUnxttb States
October Term , 1979

No. 78-1007

H. E arl F ullilove, et al., petitioners

v.

Juanita  M. Kreps, Secretary of Commerce, et al.

ON WRIT OF CERTIORARI TO THE UNITED STA TE S  
COURT OF A P PEALS FOR THE SECOND CIRCUIT

BRIEF FOR THE SECRETARY OF COMMERCE

OPINIONS BELOW

The opinion of the court of appeals (A. 206a-224a) 
is reported at 584 F.2d 600. The opinion of the dis­
trict court (A. 183a-204a) is reported at 443 F. 
Supp. 253.

JURISDICTION

The judgment of the court of appeals was entered 
on September 22, 1978. The petition for a writ of 
certiorari was filed on December 21, 1978, and 
granted on May 21, 1979. The jurisdiction of this 
Court rests on 28 U.S.C. 1254(1).

(1 )



2

QUESTION PRESENTED

Whether the minority business enterprise provision 
of the Public Works Employment Act of 1977 vio­
lates the Fifth Amendment or Title VI of the Civil 
Rights Act of 1964.

STATEMENT

1. In July 1976, Congress enacted legislation de­
signed to alleviate national unemployment and to 
stimulate the economy by distributing two billion 
dollars to state and local governments for public 
works projects. The legislation, entitled the Local 
Public Works Capital Development and Investment 
Act of 1976, 42 U.S.C. 6701-6710, charged the Sec­
retary of Commerce with the responsibility of dis­
bursing the funds through the Economic Develop­
ment Administration. The Act provided that the 
funds were to be available for appropriation until 
September 30, 1977. 42 U.S.C. 6710.1 In May 1977 
Congress amended the 1976 Act by authorizing an 
additional four billion dollars for similar projects. 
The total of six billion dollars was to be available 
for appropriation until December 31, 1978. 42 U.S.C. 
(Supp. I) 6710.2

1 The Local Public Works Act itself merely authorized the 
appropriation of two billion dollars for the local public works 
program. Congress made the actual appropriation several 
weeks later in the Public Works Employment Appropriations 
Act, Pub. L. No. 94-447, 90 Stat. 1497.

2 On the same day that Congress authorized the appropria­
tion of an additional four billion dollars for the local public 
works program, it appropriated the full amount of the newly 
authorized funds. 91 Stat. 123-124.



The new statute, entitled the Public Works Em­
ployment Act of 1977, Pub. L. No. 95-28, 91 Stat 
116-121, made various changes in the 1976 Act, in­
cluding the addition of Section 103(f) (2), 42 U.S.C. 
(Supp. I) 6705(f)(2), the “minority business en­
terprise” provision.8 Section 103(f)(2) provides:

Except to the extent that the Secretary deter­
mines otherwise, no grant shall be made under 
this Act for any local public works project un­
less the applicant gives satisfactory assurance to 
the Secretary that at least 10 per centum of the 
amount of each grant shall be expended for mi­
nority business enterprises. For purposes of this 
paragraph the term “minority business enter­
prise” means a business at least 50 per centum 
of which is owned by minority group members 
or, in the case of a publicly owned business, at 
least 51 per centum of the stock of which is 
owned by minority group members. For the 
purposes of the preceding sentence, minority 
group members are citizens of the United States 
who are Negroes, Spanish-speaking, Orientals, 
Indians, Eskimos and Aleuts.

The circumstances under which the Secretary will 
waive the 10% minority set-aside requirement are 
described in regulations promulgated under the Act. 
13 C.F.R. 317.19(b) (2). 3

3 The changes are codified in 42 U.S.C. (Supp. I) 6701 and 
note, 6705-6708, and 6710 and note.

Section 103 of the Public Works Employment Act of 1977 
added subsection (f) (2) to Section 106 of the Local Public 
Works Capital Development and Investment Act of 1976 (see 
91 Stat. 116-117). The parties and the courts below have re­
ferred to the minority business enterprise provision as Section 
103(f) (2) and, to avoid confusion, we will continue to refer 
to it in that manner.

3



4
The 1976 Act and the 1977 amendments contained 

several provisions designed to ensure that the local 
public works program would have its intended effect 
of providing an immediate boost to the economy gen­
erally and the construction industry in particular. 
Congress directed that no part of any public works 
project funded under the statute should be performed 
directly by any state or local government agency, but 
rather that all project construction should be per­
formed by private contractors who submit the lowest 
competitive bids in response to invitations from the 
grantees and who meet established criteria of re­
sponsibility (42 U.S.C. (Supp. I) 6705(e)(1)). In 
addition, Congress required grant applicants to give 
satisfactory assurance that on-site labor would be­
gin within 90 days of project approval (42 U.S.C. 
6705(d)) and instructed the Secretary to make a 
final determination on each grant application with­
in 60 days of receipt (42 U.S.C. (and Supp. I) 
6706). Moreover, the federal funds were required to 
be committed to state and local grantees by September 
30, 1977 (see note 30, infra).

In accordance with the requirements of the 1976 
Act, 42 U.S.C. (and Supp. I) 6706, the Secretary 
issued regulations to implement the local public works 
program. The regulation concerning the minority 
business enterprise provision stated (13 C.F.R. 317.19
(b )):

(1) No grant shall be made under this part 
for any project unless at least ten percent of 
the amount of such grant will be expended for 
contracts with and/or supplies from minority 
business enterprises.



5

(2) The restriction contained in paragraph 
(b)(1) of this section will not apply to any grant 
for which the Assistant Secretary [for Eco­
nomic Development] makes a determination that 
the 10 percent set-aside cannot be filled by mi­
nority businesses located within a reasonable 
trade area determined in relation to the nature 
of the services or supplies intended to be 
procured.

See also 13 C.F.R. 317.35(j). To supplement and 
elaborate on the statute and regulation, the Economic 
Development Administration issued guidelines govern­
ing minority business participation in local public 
works grants (A. 156a-167a) and a technical bulle­
tin (A. 129a-155a) providing detailed instructions 
and information to assist grantees and their con­
tractors in meeting the 10% minority business en­
terprise (MBE) requirement.

The guidelines state (A. 157a) that “ [t]he pri­
mary obligation for carrying out the 10% MBE par­
ticipation requirement rests with EDA Grantees.” 
This obligation can be satisfied through the grantee’s 
“own simple or prime contracts or through the sub­
contracts or supply contracts of its prime contrac­
tors” (A. 162a). Grantees must submit reports to 
EDA, both before the first federal letter of credit 
is issued and when the project is 40% complete, de­
scribing actual and expected minority business par­
ticipation (A. 162a-164a). In addition, grantees must 
file a statement from each participating minority 
firm “certifying that the minority firm is a bona 
fide minority business enterprise and that the mi­
nority firm has executed a binding contract to pro­



vide a specific service or material to the project for 
a specific dollar amount” (A. 164a).

The guidelines provide that EDA will approve a 
grantee’s request for a waiver of the minority busi­
ness requirement if the grantee “demonstrate [s] that 
there are not sufficient, relevant, qualified minority 
business enterprises whose market areas include the 
project location” (A. 165a). Recognizing the prob­
lems that a grantee may encounter in attempting to 
comply with the MBE provision in an area where 
the minority population is small, the guidelines per­
mit a grantee to “apply for a waiver before request­
ing bids on its project or projects if it can show that 
there are no relevant, available, qualified minority 
business enterprises which could reasonably be ex­
pected to furnish services or supply materials for the 
project” (A. 166a).

By the time Congress authorized the additional 
four billion dollars of local public works grants in 
May 1977, all grants authorized by the 1976 Act had 
been awarded. The further grants authorized in 
1977—the grants to which the minority business en­
terprise provision applied—were all awarded by Sep­
tember 30, 1977. Information submitted to the dis­
trict court shows that respondent New York State 
received at least 45 grants totaling $42,119,000 from 
funds appropriated in 1977 and that respondent New 
York City received at least 83 grants totaling $193,- 
838,646 (A. 36a).4

4 Although all grants were awarded more than two years 
ago, construction on many funded public works projects is 
not yet complete. Moreover, in October 1979, we were in­

6



7

2. On November 80, 1977, petitioners—four asso­
ciations of construction firms and a mechanical con­
tracting firm specializing in heating and air condi­
tioning work—filed this action in the United States 
District Court for the Southern District of New York. 
They alleged (A. lla-12a) that Section 103(f) (2) of 
the Act, the minority business enterprise provision, 
caused them competitive injury by excluding them 
from participating in subcontracts that they other­
wise would have obtained in competitive bidding, by 
requiring them to subcontract work that they ordi­
narily would have performed themselves, and by com­
pelling them to choose subcontractors according to 
criteria other than the amount of their bids and their 
performance records. They contended (A. 13a-15a) 
that Section 103(f)(2) establishes an impermissible 
racial classification and violates the Fifth and Four­
teenth Amendments, the Reconstruction Civil Rights 
Acts (42 U.S.C. 1981, 1983, 1985), and Titles VI 
and VII of the Civil Rights Act of 1964 (42 U.S.C. 
2000d, 2000e et seq.). Petitioners sought a tempo­
rary restraining order and a permanent injunction

formed by the Economic Development Administration that 
there were some cost underruns on New York City projects 
and that additional contracts would be let to utilize the 
remaining funds and that the MBE provision may apply 
to these contracts. There is also the possibility that on some 
projects the EDA will find that a subcontractor represented 
to be a minority business enterprise is not in fact a bona fide 
MBE. This may result in a requirement that the grantee 
expend other project funds for an acceptable minority con­
tract, that he return a portion of the grant funds to the 
United States Treasury, or that he obtain a waiver.



8

against enforcement of the minority business enter­
prise provision by the Secretary of Commerce and 
the state and local respondents (recipients of funds 
distributed under the Act). Petitioners also sought 
a declaratory judgment that Section 103(f)(2) is 
“unconstitutional, illegal[,] void[,] and unenforce­
able” (A. 19a).

After a trial,5 the district court denied petitioners’ 
requests for relief and dismissed the complaint. The 
court held (A. 187a) that

5 Petitioners presented only two witnesses. Both were 
officers in construction firms belonging to one of the peti­
tioner associations. Each testified that his company had been 
awarded contracts funded under the Act and that, in order 
to satisfy the requirements of Section 103(f) (2), the com­
pany would obtain supplies or services from minority sub­
contractors. The witnesses stated that, in the absence of 
the MBE provision, their firms would deal with other sub­
contractors who could offer lower prices, more experience, or 
both. They conceded, however, that any additional costs 
attributable to the use of minority subcontractors would 
be reflected in the overall bid and would thus be passed on 
to the local grantee (and ultimately to the federal govern­
ment) (A. 58a-97a).

The president of petitioner Shore Air Conditioning Com­
pany submitted an affidavit (A. 23a-27a) alleging that the 
company’s low bid on one project had been rejected because 
the grantee determined that the purported minority subcon­
tractor with which Shore proposed to deal was not a bona 
fide minority business enterprise within the meaning of the 
Act and that therefore Shore’s bid did not satisfy the require­
ments of Section 103(f) (2). With the exception of this affi­
davit, petition^ offered no direct evidence that they or any of 
their member firms had lost business as a result of the MBE 
provision. No subcontractor testified at trial.

James F. McNamara, an Assistant Commissioner of the 
New York State Division of Human Rights, appeared as a



9

the MBE requirement is an entirely constitu­
tional method of remedying prior acts of dis­
crimination in the construction industry and 
one which is fully consistent with the civil rights 
laws that preceded it.

The court acknowledged that the provision “distin­
guishes among various business enterprises, at least 
in part, based upon the racial background of their 
principals” (A. 191a). Because of the statute’s reli­
ance on race, “an inherently ‘suspect’ classification,” 
the district court determined that “rigid scrutiny of

witness for the Secretary and testified about the problems 
encountered by minority contractors in the construction in­
dustry. He explained that bonding requirements frequently 
pose a serious obstacle for minority businessmen “because 
the insurance companies and the banks will not cooperate 
with them if they don’t have an established track record 
[and t]hey can not establish a track record if they don’t get 
a chance to perform” (A. 113a). He also stated that minority 
firms have difficulty securing contracts because many of 
their employees are minority workers who are not union 
members and whom the unions refuse to accept (ibid.). In 
addition, the witness said that minority contractors operate 
at a disadvantage because “ [t] hey are not plugged in on the 
information. They may not be able to get advanced drawings 
or may not be able to get access to * * * the preliminary 
plans and budget estimates. * * * [B]y not having access to 
this information they are further frozen out” (A. 114a). 
McNamara reported that the New York State agencies partici­
pating in the MBE program considered it to be “the first really 
successful route in assuring that there will be a portion of 
the work going to minority contractors” (ibid.). He also 
testified that the MBE provision had improved the employ­
ment prospects for minority workers, among whom the un­
employment rate was almost twice as high as that prevailing 
within the white population (A. 115a).



10

both Congressional purpose and the means selected to 
effectuate that purpose is clearly mandated” (ibid.). 
The court stated that, in order to satisfy constitu­
tional requirements, the MBE provision must serve 
a compelling governmental interest and must be no 
more discriminatory than other available means of 
accomplishing the same objective (ibid.). The court 
found (A. 192a-202a) that the MBE provision passes 
both parts of this test.

With respect to the legitimacy of the congressional 
purpose underlying the 10% minority participation 
standard, the court first noted petitioners’ concession 
that a racial classification serves a compelling govern­
ment interest if it is intended to remedy the effects 
of present or past discrimination (A. 192a). The 
district court then reviewed the available materials 
and concluded that Congress acted with just such a 
remedial purpose in mind. The court examined the 
limited legislative history of the MBE provision it­
self, the numerous other federal antidiscrimination 
measures in recent years, and the empirical data 
available to Congress reflecting the disproportionately 
small role of minority business concerns in the na­
tional economy generally and the construction indus­
try in particular. On the basis of this evidence, the 
district court concluded that Section 103(f) (2) “was 
incorporated into the Act after only brief debate be­
cause of a general awareness of the compelling need 
for legislative action capable of overcoming the ef­
fects of prior discrimination against minority busi­



11

nesses seeking to participate in government contract­
ing” (A. 196a-197a).

Turning its attention to the means chosen by Con­
gress to accomplish this purpose, the district court 
ruled (A. 199a-202a) that the 10% MBE require­
ment is a reasonable method of “promptly alleviating 
the handicap imposed upon minority businesses due 
to the lingering effects of discriminatory conduct in 
the construction industry” (id. at 202a), In support 
of this holding, the court cited (1) “the consistent 
failure of less intrusive attempts to nurture the 
growth of minority enterprises” (A. 202a); (2) 
the limited percentage of annual government con­
tracting affected by the MBE requirement (A. 201a);
(3) the short-term nature of the local public works 
program established by the Act (A. 201a-202a); and
(4) the availability of a waiver provision to guard 
against the possibility that work on funded projects 
would be disrupted in particular areas by the lack of 
sufficient qualified minority businesses to fulfill the 
10% requirement (A, 201a).

Finally, the district court rejected (A. 202a-203a) 
petitioners’ contention that the MBE provision vio­
lates the Civil Rights Act of 1866 and 1964. The 
court stated that “it defies credulity to argue that 
measures intended to correct the invidious effects of 
racial discrimination must be limited to remedies 
which are not race sensitive, for minority groups 
would forever be frozen into the status quo if that 
were the intent of the Civil Rights Acts” (ibid.).



4. The court of appeals affirmed (A. 206a-224a). 
The court held that “even under the most exacting 
standard of review the MBE provision passes consti­
tutional muster” (A. 211a). The court therefore 
found it unnecessary to determine “ [wjhether rigid 
scrutiny is mandated whenever an act of Congress 
conditions the allocation of federal funds in a manner 
which differentiates among persons according to their 
race” (ibid.).

The court of appeals agreed with the district court 
that the minority business enterprise provision in the 
1977 Act was intended to remedy past discrimination 
against minority construction businesses (A. 215a). 
The court also agreed with the district court that 
materials available to Congress provided ample sup­
port for the conclusion that the severe shortage of 
potential minority entrepreneurs with general busi­
ness skills is a result of their historic exclusion from 
the mainstream economy and that “the history of 
discrimination was specific to the construction indus­
try” (A. 218a; see also A. 194a).

Acknowledging that remedies for past discrimina­
tion should be “sensitive to interests which may be 
adversely affected” by such relief (A. 220a), the 
court of appeals analyzed the likely impact of the 
minority business enterprise provision on non-minor­
ity contractors. For reasons similar to those that 
persuaded the district court, the court of appeals 
ruled that Section 103(f) (2) would not have an in­
equitable effect on a “ ‘small, ascertainable group of 
non-minority persons’ ” (A. 221a, quoting from



13

EEOC v. Local 638, Sheet Metal Workers, 532 F.2d 
821, 828 (2d Cir. 1976)). The set-aside for minority 
contractors, the court noted (A. 221a-222a; footnote 
omitted),

extends to only .25 percent of funds expended 
yearly on construction work in the United States. 
The extent to which the reasonable expectations 
of [petitioners], who are part of that industry, 
may have been frustrated is minimal. Further­
more, since according to 1972 census figures 
minority-owned businesses amount to only 4.3 
percent of the total number of firms in the con­
struction industry, the burden of being dispre- 
ferred in .25 percent of the opportunities in the 
construction industry was thinly spread among 
nonminority businesses comprising 96 percent of 
the industry. Considering that nonminority 
businesses have benefited in the past by not hav­
ing to compete against minority businesses, it is 
not inequitable to exclude them from competing 
for this relatively small amount of business for 
the short time that the program has to run.

SUMMARY OF ARGUMENT

1. In the exercise of its power to spend public 
money for the general welfare, Congress enacted the 
Public Works Employment Act of 1977 to revive the 
sluggish construction industry and stimulate the 
economy generally. As part of its prescription for 
the appropriate use of four billion dollars in federal 
funds, Congress provided that, to the extent possible, 
10% of the funds granted for each local public works 
project should be expended for minority business en­



14

terprises. By thus conditioning the grant of federal 
monies to state and local applicants, Congress sought 
to remedy the effects of racial and ethnic discrimi­
nation in the construction industry and to ensure 
that minority contractors would share equitably in 
the benefits conferred by the public works program. 
Such a legislative purpose is unquestionably legiti­
mate.

The Thirteenth and Fourteenth Amendments em­
power Congress to enforce the constitutional prohi­
bition against slavery and involuntary servitude and 
to secure the equal protection of the laws for persons 
of every racial and ethnic background. When Con­
gress acts in pursuit of its enforcement responsibili­
ties under the Civil War Amendments, it enjoys a 
considerable flexibility in fashioning measures to 
achieve its important antidiscrimination objectives. 
As Mr. Justice Powell observed in Regents of the 
University of California v. Bakke, 438 U.S. 265, 302 
n.41 (1978), this Court has “recognized the special 
competence of Congress to make findings with respect 
to the effects of identified past discrimination and 
its discretionary authority to take appropriate reme­
dial measures.” When the congressional aim is to 
eliminate discrimination and remedy its effects, race­
conscious affirmative measures are permissible, pro­
vided that they do not impose excessive burdens on 
persons outside the group benefited by the legislative 
action. See Regents of the University of California 
v. Bakke, supra, 438 U.S. at 362-369 (opinion of 
Brennan, White, Marshall, and Blackmun, J J . ) ;



15

United Jewish Organizations v. Carey, 430 U.S. 144 
(1977); Albemarle Paper Co. v. Moody, 422 U.S. 
405, 435 (1975).

2. Petitioners contend that the minority business 
enterprise provision is invalid, because Congress did 
not adequately describe and document the remedial 
purpose for the statute’s enactment. This argument 
rests on an erroneous view of the legislative process.

Congress does not sit as a court or an administra­
tive agency making individualized decisions on the 
basis of a limited record. Rather, Congress legislates 
broad general rules for the governance of the nation 
as a whole, and it acts on the basis of everything it 
knows about a particular problem, regardless of the 
source. Congress is not bound to consider only mate­
rials that satisfy certain evidentiary standards, and 
it is not required to announce, in accordance with 
some predetermined format, the reasons for legisla­
tive action. Article I of the Constitution prescribes 
the procedures that Congress must follow in enacting 
a law, and nowhere does it mention any requirement 
of “detailed findings in the legislative record” such 
as petitioners would impose.

The courts below properly examined all evidence 
of the legislative purpose underlying the minority 
business enterprise provision and correctly concluded 
that Congress enacted the measure in order to rem­
edy the effects of discrimination against minority- 
owned businesses. While the primary aims of the 
Public Works Employment Act were economic, Sec­
tion 103(f)(2) was added to the statute to ensure



16

that the newly authorized funds would not be used 
to perpetuate or reinforce discrimination in the con­
struction industry. Congress’ purpose in enacting the 
10% minority set-aside provision emerges clearly 
when the contemporaneous legislative history is con­
sidered in conjunction with Congress’ knowledge of 
the economic plight of minority businesses and work­
ers, its awareness of past discriminatory practices, 
and its disappointing experience with earlier legisla­
tive efforts to encourage the development of minority 
business firms.

3. The MBE provision was a proper means by 
which Congress could accomplish its remedial pur­
pose. Congress ordinarily enjoys considerable dis­
cretion in exercising its enumerated powers, and that 
principle is particularly compelling when Congress 
acts to enforce the guarantees of the Civil War 
Amendments. Because of its investigative capabili­
ties and its representative role in our tripartite sys­
tem of government, the Legislative Branch is unique­
ly suited to devise remedial measures that promise 
effective solutions to difficult social problems and that 
take adequate account of the competing interests at 
stake in the distribution of government benefits, and 
to adjust those remedies in the light of experience.

The 10% minority set-aside provision was a rea­
sonable congressional response to the failure of previ­
ous legislative measures to generate significant mi­
nority participation in federal contracting pro­
grams and to the need for expedition in providing 
emergency economic relief under the local public



17

works program. Congress had ample reason to be­
lieve that, if minority businesses were to obtain any 
meaningful benefit from the new appropriation au­
thorized in 1977, affirmative measures like those con­
tained in the MBE provision were necessary.

The solution chosen by Congress did not impose 
any undue disadvantage on nonminority contractors. 
This Court has acknowledged that some “sharing of 
the burden” of past discrimination may be required 
for remedial purposes (Franks v. Bowman Transpor­
tation Co., 424 U.S. 747, 777 (1976)), and the “shar­
ing” required here did not have any significant ad­
verse effect on the members of petitioner associations. 
The racial classification was employed only on a 
short-term basis and only in one federal program. 
No contractor was precluded from bidding on any 
particular contract, and, as long as the overall 10% re­
quirement was met, no grantee was required to award 
any particular contract to a minority business. The 
10% set-aside did not “stigmatize” any identifiable 
nonminority group, and no nonminority contractor 
was excluded from his occupation by the partial 
preference given to nonminority businesses. Pursuant 
to the statutory authorization in Section 103(f)(2), 
the Secretary established and utilized a waiver pro­
cedure to deal with the possible unavailability of suf­
ficient qualified minority contractors to satisfy the 
10% requirement on particular projects.

For all these reasons, the members of petitioner 
associations suffered no unnecessary adverse impact 
from the 10% minority set-aside provision. Peti­



18

tioners’ argument that Congress could have achieved 
the same result through “less drastic” means is un- 
persuasive. The alternatives suggested by petition­
ers also involve the use of race as a selection or eli­
gibility criterion and in that way are constitutionally 
indistinguishable from Section 103(f) (2). A broader 
selection standard, such as social or economic disad­
vantage, would have included many persons who were 
not members of minority groups that had suffered 
discrimination in the past. Congress reasonably could 
have concluded that the eligibility of such persons 
for the limited special treatment required in the fed­
erally funded program would have impeded the 
achievement of the legitimate goal of remedying the 
effects of discrimination in the construction industry.

4. The minority business enterprise provision does 
not violate Title VI of the Civil Rights Act of 1964. 
Regents of the University of California v. Bakke, 
supra, established that Title VI does not prohibit a 
constitutionally valid, remedial race-conscious pro­
gram. 438 U.S. at 287 (opinion of Powell, J .) ; id. 
at 325-326 (opinion of Brennan, White, Marshall, 
and Blackmun, JJ.). Where two statutes are cap­
able of co-existence, the courts must regard each as 
effective. Morton v. Mancari, 417 U.S. 535, 551
(1974). Moreover, even if there were a conflict, it 
should be resolved in favor of the later-enacted and 
more specific statute, the Public Works Employment 
Act of 1977.



19

ARGUMENT

THE MINORITY BUSINESS ENTERPRISE PROVI­
SION OF THE PUBLIC WORKS EMPLOYMENT ACT 
OF 1977 DOES NOT VIOLATE THE FIFTH AMEND­
MENT OR TITLE VI OF THE CIVIL RIGHTS ACT 
OF 1964

A. Congress Has Broad Authority to Remedy the Effects 
of Past Discrimination Through the Exercise of the 
Spending Power and the Powers Conferred by the 
Enforcement Sections of the Thirteenth and Four­
teenth Amendments

This Court has often acknowledged the congres­
sional power to spend money in the national interest 
and to impose conditions on such expenditures, es­
pecially those in the form of grants to state or local 
governments or private entities. See, e.g., Helvering 
v. Davis, 301 U.S. 619, 640-641 (1937); Perkins v. 
Lukens Steel Co., 310 U.S. 113, 127 (1940); Okla­
homa v. Civil Service Commission, 330 U.S. 127, 143, 
144 (1947); Lau v. Nichols, 414 U.S. 563, 569 
(1974); California Bankers Ass’n v. Shultz, 416 
U.S. 21, 50 (1974); Buckley v. Valeo, 424 U.S. 1, 
91 (1976). Moreover, the Court has recognized that 
the concept of the general welfare is not static and 
that Congress retains substantial discretion to de­
termine the ways in which federal funds should be 
allocated and distributed. As Mr. Justice Cardozo 
wrote for the Court in sustaining the constitutionality 
of the Social Security Act, “ [njeeds that were nar­
row or parochial a century ago may be interwoven in 
our day with the well-being of the Nation. What



2 0

is critical or urgent changes with the times.” Hel­
vering v. Davis, supra, 301 U.S. at 641.

The elimination of the effects of past or present 
racial and ethnic discrimination is unquestionably a 
legitimate purpose for which Congress may exercise 
its spending power. The Constitution itself estab­
lishes the legitimacy of such a legislative aim. The en­
forcement sections of the Thirteenth and Fourteenth 
Amendments authorize Congress to enact measures to 
eliminate slavery and involuntary servitude and to 
ensure that no state denies to any person within its 
jurisdiction the equal protection of the laws. What­
ever the precise scope of congressional power under 
the Civil War Amendments,6 those additions to the

6 In Katzenbach V. Morgan, 384 U.S. 641, 650-651 (1966), 
the Court stated that, by including Section 5, the enforce­
ment section, in the Fourteenth Amendment, “the draftsmen 
sought to grant to Congress * * * the same broad powers 
expressed in the Necessary and Proper Clause * * *. Correctly 
viewed, § 5 is a positive grant of legislative power authorizing 
Congress to exercise its discretion in determining whether 
and what legislation is needed to secure the guarantees of the 
Fourteenth Amendment.” Similarly, in Jones V. Alfred H. 
Mayer Co., 392 U.S. 409, 440 (1968), the Court declared 
that the enforcement section of the Thirteenth Amendment 
gives Congress the power “rationally to determine what are 
the badges and the incidents of slavery, and the authority to 
translate that determination into effective legislation.” Con­
gressional power under the Thirteenth Amendment extends to 
private as well as public activity. See Runyon V. McCrary, 
427 U.S. 160, 168-173 (1976) ; Johnson V. Railway Express 
Agency, Inc., 421 U.S. 454, 459-460 (1975) ; Tillman V. 
Wheaton Haven Recreation Assn, 410 U.S. 431, 439-440 
(1973) ; Jones V. Alfred H. Mayer Co., supra. See also 
United States V. Guest, 383 U.S. 745, 762 (1966) (Clark, J.,



21

Constitution plainly demonstrate that remedying the 
effects of discrimination based on race or national 
origin is one goal toward which Congress may prop­
erly exercise each of its enumerated powers. In par­
ticular, Congress may spend public funds in a man­
ner designed to guarantee that the benefits of fed­
eral grant programs are not denied to persons who 
have suffered discrimination in the past.

In the last 20 years, Congress has enacted numer­
ous statutes intended to eliminate discrimination and 
its effects from federally funded programs.* 7 Congress 
has also passed other antidiscrimination measures ad­
dressed to different areas of public and private ac­
tivity.8 The form of this legislation has varied as

concurring) ; id. at 781-782 (Brennan, J., concurring in part 
and dissenting in part) (congressional power under the 
Fourteenth Amendment may reach private activity).

7 The statute with the most comprehensive coverage is 
Title VI of the Civil Rights Act of 1964, 42 U.S.C. 2000d 
et seq., which broadly prohibits discrimination on the basis 
of race, color, or national origin in any program or activity 
receiving federal financial assistance. Since the passage of 
Title VI, many other specific federal grant statutes have 
contained similar prohibitions against discrimination in par­
ticular funded activities. See, e.g., State and Local Fiscal 
Assistance Amendments of 1976, 31 U.S.C. 1242; Energy 
Conservation and Production Act, 42 U.S.C. 6870; Housing 
and Community Development Act of 1974, 42 U.S.C. 5309; 
Comprehensive Employment and Training Act of 1973, 29 
U.S.C. 991.

8 The congressional effort to end discrimination and its 
effects began after the Civil War with the enactment of the 
Civil Rights Act of 1866, 42 U.S.C. 1981 et seq. See generally 
B. Schwartz, Statutory History of the United States-Civil 
Rights (1970). Legislative activity has substantially increased



22
Congress has acquired experience in dealing with the 
continuing problems of racial and ethnic discrimina­
tion. Compare, for example, the relatively simple 
provisions enacted in 1957 to protect the voting rights 
of racial minorities8 9 with the elaborate procedures 
established eight years later for the same purpose.10

Although many early federal statutes did not go 
beyond bare prohibitions against discrimination, Con­
gress is not limited to such negative commands. This 
Court has sustained legislation that requires race­
conscious affirmative measures to eliminate discrim­
ination and its effects. See generally Regents of the 
University of California v. Bakke, 438 U.S. 265, 
362-369 (1978) (opinion of Brennan, White, Mar­
shall, and Blackmun, JJ.). For example, under 
Title VII of the Civil Rights Act of 1964, employers

since this Court’s decision in Brown V. Board of Education, 
347 U.S. 483 (1954). See, e.g., the Civil Rights Act of 1957, 
Pub. L. No. 85-315, 71 Stat. 634; the Civil Rights Act of 
1964, Pub. L. No. 88-352, 78 Stat. 241; the Voting Rights Act 
of 1965, Pub. L. No. 89-110, 79 Stat. 437; the Voting Rights 
Act Amendments of 1970, Pub. L. No. 91-285, 84 Stat. 314; 
the 1975 Amendments to the Voting Rights Act of 1965, Pub. 
L. No. 94-73, 89 Stat. 400; the Fair Housing Act of 1968, 
Pub. L. No. 90-284, 82 Stat. 81-90; the Equal Employment 
Opportunity Act of 1972, Pub. L. No. 92-261, 86 Stat. 103; 
the Equal Credit Opportunity Act, Pub. L. No. 93-495, 88 
Stat. 1521; and the Equal Credit Opportunity Act Amend­
ments of 1976, Pub. L. No. 94-239, 90 Stat. 251.

9 See Section 131 of the Civil Rights Act of 1957, Pub. L. 
No. 85-315, 71 Stat. 637 (codified in 42 U.S.C. (1958 ed.) 
1971(b )-(e)).

10 See the Voting Rights Act of 1965, Pub. L. No. 89-110, 
79 Stat. 437 (codified in 42 U.S.C. (1964 ed., Supp. I ll)  
1973-1973p).



23

may be required to avoid racially disparate effects of 
employment tests by using racial criteria (i.e., one 
passing score for blacks and another for whites) 
so that tests will predict success on the job equally 
well for each racial group. See Albemarle Paper 
Co. v. Moody, 422 U.S. 405, 435 (1975) (discussing 
with approval EEOC Guidelines requiring “differen­
tial validation” of employment tests for minority and 
nonminority groups where technically feasible). The 
Voting Rights Act of 1965 permits officials to take 
race into account in apportioning legislative districts 
in a way that fairly represents the voting strength 
of different racial and ethnic groups. United Jewish 
Organizations v. Carey, 430 U.S. 144 (1977). Guide­
lines issued under Title VI of the Civil Rights Act 
of 1964 require “affirmative steps to rectify the lan­
guage deficiency * * * [wjhere inability to speak 
and understand the English language excludes na­
tional origin-minority group children from effective 
participation in the educational program offered by a 
school district.” 35 Fed. Reg. 11595 (1970); see 
Lau v. Nichols, supra, 414 U.S. at 568.

This Court has held that Congress may generalize 
in identifying the victims of discrimination where, 
as here, measurement of the effects of discrimination 
on an individual basis is impractical or impossible. 
See Gaston County v. United States, 395 U.S 285, 295- 
296 (1969); Regents of the University of California 
v. Bakke, supra, 438 U.S. at 377-378 (opinion of 
Brennan, White, Marshall, and Blackmun, JJ.). See 
also Teamsters v. United States, 431 U.S. 324, 357-



24

362 (1977). Similarly, the impact of remedial legis­
lation enacted by Congress to eliminate and redress 
the effects of past discrimination need not be limited to 
proven discriminators. See Regents of the University 
of California v. Bakke, supra, 438 U.S. at 366 (opin­
ion of Brennan, White, Marshall, and Blackmun, JJ.); 
Franks v. Bowman Transportation Co., 424 U.S. 747, 
774-775, 777 (1976); Griggs v. Duke Power Co., 401 
U.S. 424, 430 (1971). Even if individual recipients 
of financial assistance or nonminority contractors have 
not themselves discriminated, Congress may require 
them to adjust their conduct in order to ensure, for 
example, that in the allocation of funds under the 
1977 local public works program minorities do not 
suffer the lingering effects of past discrimination in 
the construction industry.

Katzenbach v. Morgan, 384 U.S. 641 (1966), illus­
trates this point. There, the Court upheld federal 
legislation prohibiting application of New York 
State’s literacy requirements to citizens educated in 
schools accredited by the Commonwealth of Puerto 
Rico, regardless of whether the New York require­
ment itself violated the Fourteenth Amendment. The 
Court explained (384 U.S. at 653) that Congress, in 
the exercise of its power under Section 5 of the 
Fourteenth Amendment, was the proper govern­
mental branch to

assess and weigh the various conflicting consid­
erations—the risk or pervasiveness of the dis­
crimination in governmental services, the effec­
tiveness of eliminating the state restriction on



25

the right to vote as a means of dealing with the 
evil, the adequacy or availability of alternative 
remedies, and the nature and significance of the 
state interests that would be affected by the nul­
lification of the English literacy requirement as 
applied to residents who have successfully com­
pleted the sixth grade in a Puerto Rican school.

Morgan thus demonstrates that, when Congress has 
determined that a particular measure is necessary to 
remedy a Fourteenth Amendment violation or to 
prevent the occurrence of such a violation (e.g., the 
discriminatory denial of public services to Puerto 
Ricans), the Court will not interfere and reweigh 
the factors considered by Congress in reaching that 
judgment, even if the legislative solution chosen ad­
versely affects some state practice (e.g., the use of a 
literacy test as a qualification for voting) that itself 
does not necessarily violate the Fourteenth Amend­
ment or any other constitutional provision. See also 
United Jewish Organizations v. Carey, supra, 430 U.S. 
at 161; Oregon v. Mitchell, 400 U.S. 112 (1970).

The same reasoning applies here. Congress is the 
governmental body uniquely well situated to determine 
which groups have suffered discrimination in the past 
and what measures are most likely to prevent further 
discrimination and to restore members of those groups 
to the position they would have occupied had the dis­
crimination not occurred. As Mr. Justice Powell ob­
served in Bakke, this Court has “recognized the spe­
cial competence of Congress to make findings with re­
spect to the effects of identified past discrimination



26

and its discretionary authority to take appropriate 
remedial measures.” 438 U.S. at 302 n.41.

Indeed, petitioners have conceded (A. 192a) that 
the racial classification established by the minority 
business enterprise provisions serves a compelling 
governmental interest if it is intended to remedy the 
effects of present or past discrimination. They argue, 
however, that the legislative history of Section 
103(f) (2) “fails to evince findings of prior discrimi­
nation sufficient to justify upholding” a federal grant 
statute that takes race and national origin into ac­
count in distributing government funds (Pet. Br. 14- 
21; GBC Br. 10-17).11 They also contend (Pet. Br. 
21-28; GBC Br. 18-31) that, even if Congress’ pur­
pose was to remedy the effects of past discrimination, 
the 10% minority set-aside is an unacceptable method 
of accomplishing that end, because it imposes an un­
necessary burden on nonminority businesses that wish 
to compete for local public works funds. We address 
these arguments in turn.

B. Congress Concluded that Legislative Action Was 
Necessary to Eliminate the Effects of Discrimination 
in the Construction Industry

1. Inquiry into the congressional purpose underly­
ing the MBE provision must begin with an apprecia­
tion of the unique nature of the legislative role. While 
courts decide cases and controversies on the basis of

11 “Pet. Br.” refers to the brief apparently filed by all 
petitioners. “GBC Br.” refers to the brief filed by petitioner 
General Building Contractors of New York State, Inc.



27

individual records, legislatures address broader prob­
lems and attempt to devise solutions that extend 
beyond the parties to any single dispute. As this 
Court observed in Schlesinger v. Reservists Com­
mittee to Stop the War, 418 U.S. 208, 221 n.10
(1974), “ [t]he legislative function is inherently gen­
eral rather than particular and is not intended to be 
responsive to adversaries asserting specific claims or 
interests peculiar to themselves.” A legislature, un­
like a court or an administrative agency, is not ob­
ligated to confine its attention to the material con­
tained in a record compiled for the resolution of a 
particular dispute. Rather, it is empowered to make 
laws on the basis of information obtained from a va­
riety of sources in a variety of ways. It may rely on 
the accumulated experiences of its individual members 
and on its collective evaluation of the success or fail­
ure of past legislative attempts to solve particular 
problems. When it desires additional information, it 
may conduct its own investigation unrestricted by 
many of the procedural rules that govern judicial 
and agency action.

These distinctive features of the legislative role, 
which are, of course, rudimentary in our system of 
separation of powers, bear repeating here because of 
the kind of attack petitioners level against the minor­
ity business enterprise provision. Petitioners assert 
that Section 103(f)(2) of the Public Works Em­
ployment Act is invalid because the legislative history 
of the statute does not contain the “detailed findings 
of constitutional or statutory violations (Pet. Br. 15)



28

allegedly necessary to justify the use of a racial classi­
fication in the distribution of government benefits. 
Petitioners maintain that the courts below erred by 
“embark [ing] on a search outside of the legislative 
record in an effort to sustain” the MBE provision (Pet. 
Br. 17).

This argument is based on a false premise. By their 
unstated assumption that congressional policy de­
cisions must stand or fall on the basis of a limited col­
lection of materials known as the “legislative record,” 
petitioners cast Congress in the role of an administra­
tive agency whose actions are subject to judicial re­
view under something akin to the “substantial evi­
dence” standard. Petitioners’ challenge to the MBE 
provision thus rests on a fundamental misconception 
of Congress’ place in our constitutional system. Con­
trary to petitioners’ apparent belief, Congress may 
legislate on the basis of everything it knows about 
a particular situation, and it need not record every— 
or even any—element of factual support for a bill in 
the accompanying committee reports or in the course 
of floor debates.12 Specific findings that a proposed 
remedial measure will assist only those who have suf­
fered injury in the past and will adversely affect only 
those who have caused such injury are not necessary. 
“Congress may paint with a much broader brush.” 
Oregon v. Mitchell, 400 U.S. 112, 284 (1970) (Stew­
art, J., concurring in part and dissenting in part).

12 Indeed, neither committee consideration nor floor debate 
is required at all in order for a bill to be validly enacted into 
law under the procedures prescribed by Article I of the 
Constitution.



29

Because Congress is engaged in the business of 
framing general rules for the governance of society, 
not the resolution of individual disputes, judicial re­
view of a federal statute proceeds differently from re­
view of agency action. An agency ordinarily must 
state the reasons for its action in the administrative 
record, and if a reviewing court finds those reasons 
deficient, it will normally reverse and remand for 
further proceedings without examining other possible 
justifications for the agency’s decision; this is often 
true even where the additional or alternative reasons 
for agency action are known to the court and sup­
ported by extra-record material. See SEC v. Chenery 
Corp., 318 U.S. 80 (1943). By contrast, in its efforts 
to ascertain legislative purpose on review of a federal 
statute, a court need not restrict its vision to the con­
tents of a legislative record compiled by Congress. 
A court may look not only to the statute’s legislative 
history, narrowly defined, but also to the language of 
the statute, its relationship with other federal laws, 
and any other available materials that may explain 
the congressional decision to adopt a particular 
measure.

To be sure, when a statutory provision involves a 
racial classification, a reviewing court must take spe­
cial care in satisfying itself that the congressional 
purpose underlying the provision is legitimate and 
compelling.13 But this does not mean that the court

13 As four members of the Court stated in Bakke, “because 
of the significant risk that racial classifications established



30

must limit its attention to a discrete body of materials 
labelled the “legislative record.” On the contrary, the 
court may and should consider all sources of infor­
mation concerning the reasons for congressional ac­
tion. Statutes involving racial classifications are, in 
this respect, no different from any others. Legislative 
purpose may be found in any materials that tend 
to reveal the reasons for a statute’s enactment.14 Cf.

for ostensibly benign purposes can be misused, * * * it is 
inappropriate to inquire only whether there is any con­
ceivable basis that might sustain such a classification. In­
stead, to justify such a classification an important and artic­
ulated purpose for its use must be shown.” 438 U.S. at 361 
(opinion of Brennan, White, Marshall, and Blackmun, JJ .).

Contrary to petitioners’ contention (Pet. Br. 12 & n.4, 15 
n.6), this statement was not intended to suggest that a statu­
tory racial classification can never be sustained unless Con­
gress includes in the “legislative record” specific findings of 
past discrimination and an explicit declaration that the 
statute’s purpose is to remedy that discrimination. Indeed, 
the four members of the Court who joined the statement 
would have upheld the admissions program employed by the 
Medical School of the University of California at Davis, even 
though, as Mr. Justice Powell observed, the racial classifica­
tion used in that program was not supported by any “deter­
mination by the legislature or a responsible administrative 
agency that the University engaged in a discriminatory prac­
tice requiring remedial efforts.” 438 U.S. at 305. See also 
id. at 305-310. A fortiori here, where Congress has identified 
a history of discrimination in the construction industry and 
has enacted the MBE provision in response to that back­
ground, the constitutionality of the statute’s reliance on 
minority ownership as a distinguishing factor for potential 
contractors in federally funded public works projects should 
be sustained.

14 A different rule, such as the one advocated by petitioners, 
would encumber the legislative process in ways not required



31

Village of Arlington Heights v. Metropolitan Hous­
ing Development Corp., 429 U.S. 252, 266-268 (1977);

by, and arguably inconsistent with, Article I of the Consti­
tution. An obligation to make a thorough “legislative record” 
for each statute would severely hamper Congress’ ability to 
perform its lawmaking function, but would not contribute 
significantly to either the quality of the final legislative prod­
uct or the reliability of the information available to a court 
on judicial review. Committee staffs presumably would be 
assigned the task of inserting voluminous prepared materials 
into the “legislative record” in order to ensure that a review­
ing court would find a sufficient factual basis for congres­
sional action. No substantive benefit would accrue to the 
lawmakers’ empirical knowledge or their deliberative proc­
esses, but Congress might often be disabled, for practical 
purposes, from making eleventh-hour changes in proposed 
bills to reflect the realities of political compromise. The need 
to compile a “legislative record” adequate to survive the kind 
of judicial review contemplated by petitioners would in­
evitably reduce the usefulness of important legislative de­
vices such as the floor amendment, through which Congress 
can adjust proposed statutory language in response to con­
cerns raised during general debate and can thereby better 
fulfill its representative role.

This Court’s decisions show that measures first advanced 
as floor amendments do not fail because of inadequate con­
temporaneous statements of legislative purpose. In Katzen- 
bach v. Morgan, supra, for example, the Court sustained 
Section 4(e) of the Voting Rights Act of 1965, despite Con­
gress’ failure explicitly to declare the reasons for the statute’s 
adoption. The Court examined the information known to 
Congress in order to determine whether there was a sufficient 
basis for the exercise of legislative power. See 384 U.S. at 
651-656. Section 4(e) was a floor amendment to the Act, 
and the committee hearings and reports therefore did not 
refer to the provision. 384 U.S. at 669 n.9 (Harlan, J., dissent­
ing). See also Heart of Atlanta Motel v. United States, 379 
U.S. 241, 252 (1964) ; Katzenbach V. McClung, 379 U.S. 294, 
299 (1964).



32

Califano v. Goldfarb, 430 U.S. 199, 212-217 (1977); 
Califano v. Webster, 430 U.S. 313, 316-321 (1977).

2. Applying these principles of judicial review, 
the district court and court of appeals in the present 
case correctly concluded that Congress added the 
MBE provision to the Public Works Employment Act 
of 1976 in order to remedy the effects of discrimination 
against minority-owned businesses. Of course, the pri­
mary aim of the Act as a whole (and its predeces­
sor, the Local Public Works Capital Development and 
Investment Act of 1976) was to stimulate the national 
economy and especially the sagging construction in­
dustry. Unemployment in the industry was high, and 
Congress hoped that grants for local public works 
programs would generate construction jobs that would 
in turn induce a more widespread economic revival.
S. Rep. No. 95-38, 95th Cong., 1st Sess. 1-2 (1977) ; 
H.R. Rep. No. 95-20, 95th Cong., 1st Sess. 1-2 (1977); 
A. 35a-44a, 188a & n.6. But those overall aims of the 
Act do not imply that Congress had no further pur­
pose for enacting particular provisions in the statute. 
To the contrary, the available evidence demonstrates 
that the MBE provision was intended to redress past 
discrimination against black and other minority con­
tractors, while at the same time contributing to the 
general congressional goal of “target[ing] the Federal 
assistance more accurately into the areas of greatest 
need.” H.R. Rep. No. 95-20, supra, at 2.

When Congress enacted the MBE provision, it 
knew that the unemployment rate among minority 
workers was twice as high as that among nonminor­



33

ity workers. See 123 Cong. Rec. S3910 (daily ed. 
Mar. 10, 1977) (remarks of Sen. Brooke); id. at 
H1423 (daily ed. Feb. 24, 1977) (remarks of Rep. 
Stokes). Public Works Employment Act of 1977: 
Hearings Before the Subcomm. on Regional and Com­
munity Development of the Senate Comm, on Envi­
ronment and Public Works 95th Cong., 1st Sess. 110, 
137, 155, 401 (1977). Congress also knew that un­
employment in the minority construction sector was 
particularly severe. 123 Cong. Rec. H1423 (daily 
ed. Feb. 24, 1977) (remarks of Rep. Stokes). More­
over, Congress acted against the backdrop of more 
than two decades of legislative efforts to end racial 
and ethnic discrimination in the market place and to 
remedy the effects of discrimination against minori­
ties.15 16 Experience with these earlier efforts gave Con­
gress a broad perspective on the deep-seated nature 
of the problems encountered by minorities as a result 
of past discrimination in this country. As the court 
of appeals held in rejecting petitioners’ argument 
that the MBE provision was not intended to remedy 
discrimination (A. 215a-216a, footnote omitted),

[i]n view of the comprehensive legislation which
Congress has enacted during the past decade and

15 The term “minority” as used in the MBE provision 
refers to American citizens who are Negroes, Spanish- 
speaking, Orientals, Indians, Eskimos, or Aleuts. Before the 
enactment of the MBE provision, this definition had been 
used in federal affirmative action efforts under regulations 
concerning the procurement of government supplies and the 
performance of government contracts. See, e.g., 41 C.F.R.
1-1.1302, 1-1.1303, 1-1.1310-2.



34

a half for the benefit of those minorities who 
have been victims of past discrimination, any 
purpose Congress might have had other than to 
remedy the effects of past discrimination is dif­
ficult to imagine.

See also Constructors Ass’n of Western Pennsyl­
vania v. Kreps, 573 F.2d 811, 817 (3d Cir. 1978); 
Rhode Island Chapter, Associated General Contrac­
tors of America v. Kreps, 450 F. Supp. 338 (D. R.I. 
1978). Cf. Regents of the University of California 
v. Bakke, supra, 438 U.S. at 348-349 (opinion of 
Brennan, White, Marshall, and Blackmun, 3J.).

Many times during the last 10 years, Congress has 
given specific attention to the problems encountered 
by minority-owned businesses,18 and has enacted leg- 16

16 See, e.g., Review of Small Business Administration’s 
Programs and Policies—1971: Hearings Before the Senate 
Select Comm, on Small Business, 92d Cong., 1st Sess. 283- 
284 (1971) ; Government Minority Small Business Programs: 
Hearings Before the Subcomm. on Minority Small Business 
Enterprise of the House Select Comm, on Small Business, 
92d Cong., 1st Sess. (1971) ; Government Minority Enterprise 
Programs—Fiscal Year 197A: Hearings Before the Subcomm. 
on Minority Small Business Enterprise and Franchising of 
the House Permanent Select Comm, on Small Business, 93d 
Cong., 1st Sess. (1973) ; Minority Enterprise and Allied 
Problems of Small Business: Hearings Before the Subcomm. 
on SBA Oversight and Minority Enterprise of the House 
Comm, on Small Business, 94th Cong., 1st Sess. (1975), and 
the related report, H.R. Rep. No, 94-468, 94th Cong., 1st Sess. 
(1975) ; The Effects of Government Regulations on Small 
Business and the Problems of Women and Minorities in 
Small Business in the Southwestern United States: Hearing 
Before the Senate Select Comm, on Small Business, 94th 
Cong., 2d Sess. (1976) ; Minority Business Development Ad­



35

islation designed to remedy these problems.17 When 
Congress enacted the MBE provision, it was fully 
aware that as a result of discrimination minorities 
are represented in disproportionately low numbers in 
the ownership of businesses18 and that those few 
minority-owned businesses that do exist receive a 
minuscule share of the total gross receipts of Ameri­
can businesses and of the federal, state, and local 
contract dollar.19 “Of $2.54 trillion in gross business

ministration: Hearing Before the Minority Subcomm. on In­
tergovernmental Relations of the Senate Comm, on Govern­
ment Operations, 94th Cong., 2d Sess. (1976).

17 We have included, as an Appendix to this brief, additional 
materials describing the problems encountered by minority- 
owned businesses as a result of discrimination and the pro­
grams Congress has developed in an attempt to remedy the 
effects of previous discrimination and to prevent discrimina­
tion in the future.

18 In 1976, Senator Javits explained on the floor of the 
Senate that “while minority persons comprise over 15 
percent of the Nation’s population only 3 percent of the 13 
million businesses in the United States are owned by minority 
persons.” 122 Cong. Rec. 13866 (1976).

19 Petitioners contend (Pet. Br. 19-20) that “a low repre­
sentation of minorities can be found only if both the pre- 
1965 and post-1965 periods are taken into account together” 
and that statistics including the effects of discrimination 
occurring before 1965, the effective date of Titles VI and VII 
of the Civil Rights Act of 1964, are legally irrelevant. Peti­
tioners’ factual contention is unsupported by any authority 
and is inconsistent with the statistical data that show that, 
although there has been some increase in minority participa­
tion in business, minorities have been significantly under­
represented in business revenues on a yearly, not just a 
cumulative, basis. See, e.g., 124 Cong. Rec. E985 (daily ed.



36

receipts for the nation, about $16.6 billion, or 0.65 
percent, of that total was realized by the minorities.” 
122 Cong. Rec. 34754 (1976) (statement by Sen. 
Glenn).* 20 Less than one percent of the federal con­
tract dollar goes to minority enterprises. See 123 
Cong. Rec. S3910 (daily ed. Mar. 10, 1977) (re­
marks of Sen. Brooke).21 Referring to this under­

Mar. 2, 1978) (remarks of Rep. Hamilton) ; 122 Cong. Rec. 
34754 (1976) (statement of Sen. Glenn). See also notes 21 
and 24, infra.

More important, petitioners’ apparent assumption that Con­
gress does not have a legitimate interest in eliminating the 
effects of discrimination that occurred before 1965 is incor­
rect. Whether or not the discriminatory practices that ham­
pered the development of minority businesses were illegal 
before the passage of the 1964 Civil Rights Act (and they 
may well have violated 42 U.S.C. 1981 and the Thirteenth 
and Fourteenth Amendments), Congress is empowered to 
declare the continuing effects of such discrimination unac­
ceptable and to redress the disadvantages that minority 
businesses still suffer as a result of deliberate exclusion in 
the past.

20 See also Minority Business Development Administration: 
Hearing Before the Subcomm. on Intergovernmental Rela­
tions of the Senate Comm, on Government Operations, 94th 
Cong., 2d Sess. 2 (1976) (remarks of Sen. Glenn) ; H.R. 
Rep. No. 94-1791, 94th Cong., 2d Sess. 124 (1977). The latter 
report is a summary of the activities of the House Committee 
on Small Business.

21 There are few statistics available concerning the amount 
of state and local contracts going to minority businesses. 
Firms owned by minority group members received less than 
seven-tenths of one percent of all contracting dollars spent 
by those state and local governments that provided data in 
response to a 1973 United States Civil Rights Commission 
Survey, the results of which were transmitted to Congress 
in 1975 (see 42 U.S.C. 1975c (b )). See Minorities and Women



37

representation of minority businesses, a 1975 report 
of the Subcommittee on SBA Oversight and Minority 
Enterprise of the House Committee on Small Busi­
ness concluded that

[T]he effects of past inequities stemming from 
racial prejudice have not remained in the past. 
The Congress has recognized the reality that 
past discriminatory practices have, to some de­
gree, adversely affected our present economic 
system.

■%. ij«

The presumption must be made that past dis­
criminatory systems have resulted in present 
economic inequities.

H.R. Rep. No. 94-468, 94th Cong., 1st Sess. 1-2
(1975).

Congress, however, did not need to rely solely on 
the statistical showing of discrimination against 
minority-owned businesses. Through many years of 
hearings and debates on legislation to proscribe dis­
criminatory conduct against minorities, and particu­
larly through past efforts to deal with the problems 
of minority businesses, Congress has gained consider­
able experience in identifying and dealing with the 
effects of discrimination. Congress has learned that 
“ [f]or a complex of historical reasons—lack of capi­

as Government Contractors, A Report of the United States 
Commission on Civil Rights 2, 86 (May 1975). The report’s 
findings have been cited by congressional committees con­
cerned with the problems of minority-owned businesses. See, 
e.g., H.R. Rep. No. 94-468, 94th Cong., 1st Sses. 11 (1975).



tal, exclusions from trades,[22] discrimination by busi­
ness people and the public—minority business has 
been concentrated in that part of the market found 
least profitable by other businesses.” 22 23 Moreover, 
minority-owned businesses have been excluded from 
opportunities in the construction industry by the op­
eration of subtle, but nonetheless discriminatory, 
forces.24 As the Appendix indicates, the discrimina­

22 Indeed, “ [judicial findings of exclusion from crafts on 
racial grounds are so numerous as to make such exclusion a 
proper subject for judicial notice.” Steelworkers V. Weber, 
Nos. 78-432, 78-435, 78-436 (June 27, 1979), slip op. 2 n.l. 
Like this Court, the lower federal courts are well aware of 
the pervasive nature of discrimination in the construction in­
dustry. See, e.g., United States V. Iromvorkers Local 86, 443 
F.2d 544 (9th Cir.), cert, denied, 404 U.S. 984 (1971) ; Con­
tractors Ass’n of Eastern Pennsylvania V. Secretary of Labor, 
442 F.2d 159 (3d Cir.), cert, denied, 404 U.S. 854 (1971); 
United States V. Masonry Contractors Ass’n of Memphis, 
497 F.2d 871 (6th Cir. 1974) ; Associated General Con­
tractors of Mass., Inc. V. Altshuler, 490 F.2d 9 (1st Cir. 
1973), cert, denied, 416 U.S. 957 (1974). See also the cases 
cited by the district court in the present case dealing with 
discrimination in New York (A. 198a n.17). Among other 
consequences, employment discrimination has the effect of 
blocking at an early stage one leading avenue toward becom­
ing a contractor. See Rhode Island Chapter, Associated Gen­
eral Contractors V. Kreps, 450 F. Supp. 338, 356 (D. R.I. 
1978).

23 The Effects of Government Regulations on Small Business 
and the Problems of Women and Minorities in Small Business 
in the Southwestern United States: Hearings Before the 
Senate Select Comm, on Small Business, 94th Cong., 2d Sess. 
3 (1976) (remarks of Sen. Bartlett) ; see also id. at 18 (state­
ment of Sen. Laxalt).

24 In 1972, according to Bureau of the Census statistics, the 
gross receipts for minority-owned firms constituted approxi­
mately 1.1% of the total receipts for all firms. 1972 Census

38



39
tory practices of nonminority lenders, insurers, con­
tractors, and purchasers, as well as those of federal 
and state government officials, have excluded minority- 
owned businesses from available contracting oppor­
tunities.25 These discriminatory practices continue to

of Construction Industries, United States Summary—Statis­
tics for Construction Establishments With and Without Pay­
rolls, Table A1 (August 1975) ; 1972 Survey of Minority- 
Owned Business Enterprises, Minority-Owned Businesses, 
Table 1 (May 1975) (hereinafter “Summary Volume”). 
Available data indicate that the total number of minority- 
owned firms (which in some circumstances may include more 
than one establishment) in the construction industry is ap­
proximately 4.3% of the total number of establishments in 
the construction industry. 1972 Census of Construction In­
dustries, United States Summary—Statistics for Construction 
Establishments With and Without Payrolls, Table A1 (August 
1975) ; 1972 Survey of Minority-Owned Businesses, supra. 
Summary Volume, Table 1. Similarly, the total number of 
minority-owned firms (which may in some instances include 
more than one establishment) in the heavy construction in­
dustry is approximately 2.3% of the total number of estab­
lishments in the heavy construction industry and this group 
receives only 0.3% of the total receipts for heavy construction 
work. 1972 Census of Construction Industries, United States 
Summary—Statistics for Construction Establishments With 
and Without Payrolls, Table A1 (August 1975) ; 1972 Survey 
of Minority-Owned Business Enterprises, supra, Summary 
Volume, Table 1.

As used in the Census statistical tables, the term “minority” 
includes, blacks, persons of Spanish-origin, and persons of 
Asian American, American Indian, or other ancestry. 1972 
Survey of Minority-Owned Business Enterprises, supra, Sum­
mary Volume at 1.

25 Petitioners erroneously assert (GBC Br. 14) that a 1975 
Report of the United States Civil Rights Commission, Minori­
ties and Women as Government Contractors (May 1975), 
“does not list discrimination as an obstacle to minority busi­
ness enterprise participation in federal procurement pro­
grams”. This assertion is incorrect. See id. at 21 and 107.



40

limit the opportunities available to minority-owned 
businesses because they deny minority-owned busi­
nesses the credentials needed for success in the busi­
ness community.

Nonminority lenders and insurers make subjective 
evaluations of the credit-worthiness and insurability 
of minority owned firms. See App., infra, 5a-6a, 17a- 
20a. Because minority-owned firms have often been 
discriminated against in their efforts to obtain loans 
and bonding, nonminority lenders and insurers often 
deny the applications of minority-owned businesses on 
the ground that they do not have a sufficient credit- 
rating or record of success.

Similarly, minorities seeking to obtain contracts as 
suppliers or subcontractors are often precluded from 
obtaining employment because of the effects of prior 
discrimination. Although prime contracts for gov­
ernment funded construction projects are normally 
let by a competitive bidding process, contracts for 
supplies and subcontracts for construction work are 
often let through the subjective process of negotiated 
contracts. Because minority-owned businesses have 
been precluded by previous discrimination from gain­
ing experience as contractors and suppliers in the 
construction industry, many nonminority contractors 
have no experience in dealing with minority-owned 
businesses. As a result, nonminority-owned business­
es are unlikely to contract with minorities. As the 
testimony at trial demonstrates, established contrac-

Moreover, petitioners offer no rational explanation for the low 
level of minority participation in the construction industry 
that would rebut the inference that minorities have been 
excluded by discrimination and its lingering effects.



41

tors are frequently unfamiliar with the abilities of 
minority-owned businesses and are reluctant to con­
tract with firms that do not have a known “track 
record” (A. 65a, 81a, 86a, 89a-91a). See App., in­
fra, 16a-18a.

Recognizing the problems encountered by minority- 
owned businesses, Congress has enacted a number of 
measures designed to aid minority contractors and 
subcontractors and to insure that federal programs 
do not have the effect of excluding minorities. See, 
e.g., Section 8(a) of the Small Business Act of 1958, 
Pub. L. No. 85-536, 72 Stat. 389, 15 U.S.C. 637(a). 
By the time Congress considered the Public Works Em­
ployment Act of 1977, however, neither previous legis­
lative efforts, nor parallel efforts by the Executive,26 
had had a substantial impact on the prospects of 
minority-owned businesses. Nor had antidiscrimina­
tion provisions such as 42 U.S.C. 1981 and Title VI 
of the Civil Rights Act of 1964 been successful in 
eliminating prejudice against such firms. In Novem­
ber 1976 the House Committee on Small Business 
described the problems still encountered by minority 
businesses in the following way (H.R. Rep. No. 
94-1791, 94th Cong., 2d Sess. 182-183 (1977)):

26 Exec. Order No. 11,458, 34 Fed. Reg. 4937 (1969), 
as amended by Exec. Order No. 11,625, 36 Fed. Reg. 19967 
(1971), established the Office of Minority Business Enterprise 
within the Department of Commerce. The Office is charged 
with the responsibility for devising programs and coordinating 
inter-agency activities to encourage development of minority 
enterprises. Federal procurement regulations also require all 
federal agencies to ensure that businesses dealing with the 
government take efforts to extend contracting opportunities 
to minority business enterprises. 41 C.F.R. 1-1.1302.



42

The very basic problem * * * is that, over the 
years, there has developed a business system 
which has traditionally excluded measurable mi­
nority participation. In the past more than the 
present, this system of conducting business trans­
actions overtly precluded minority input. Cur­
rently, we more often encounter a business sys­
tem which is racially neutral on its face, but 
because of past overt social and economic dis­
crimination is presently operating, in effect, to 
perpetuate these past inequities. Minorities, un­
til recently have not participated to any meas­
urable extent, in our total business system gen­
erally, or in the construction industry, in par­
ticular. However, inroads are now being made 
and minority contractors are attempting to 
“break-into” a mode of doing things, a system, 
with which they are empirically unfamiliar and 
which is historically unfamiliar with them.

Thus, in the face of earlier failures, Congress was 
aware of the need to develop a program that would 
insure that the four billion dollars to be appropri­
ated in Hound II of the local public works program 
would not be used to carry forward the effects of 
discrimination. Although the legislative discussion 
of the MBE provision is sparse because the provision 
was proposed as an amendment during floor debate, 
the contemporaneous evidence fully supports the con­
clusion that the provision was intended to remedy 
the effects of discrimination against minority busi­
nesses. When the 1977 legislative materials are 
viewed in light of Congress’ previous efforts to ac­
complish the same purpose, it is indeed “difficult to 
imagine” (A. 216a) that Congress had anything



43

else in mind when it added Section 103(f)(2) to 
the Public Works Employment Act.

On Friday, February 4, 1977, the final day of 
hearings in the House on H.R. 11, the bill that be­
came the 1977 Act, the subcommittee received testi­
mony from the Michigan Advisory Committee to the 
United States Commission on Civil Rights. To Amend 
and Extend the Local Public Works Capital De­
velopment and Investment Act: Hearings before the 
Subcomm. on Economic Development of the House 
Comm, on Public Works and Transportation, 95th 
Cong., 1st Sess. 808-835 (1977). Jo-Ann Terry, the 
chairperson of the Advisory Committee, reported on 
the Committee’s “findings regarding the racial im­
pact of the December 1976 local public works project 
selections in Michigan” (id. at 809). On the basis 
of data received from the Economic Development 
Administration only a few days earlier, the Commit­
tee concluded that “among those jurisdictions fund­
ed, those with few minorities received significantly 
more local public works funding per capita than did 
those jurisdictions with high minority populations” 
(ibid.). Terry told the House subcommittee that, at 
least in Michigan and perhaps in other states as well, 
“the purposes of Congress have been distorted by the 
EDA’s project selections” in implementing Round I 
of the local public works program (id. at 810). Terry 
charged that the program, intended to provide long­
term benefits through capital improvements, had been



44

“distorted so that it is literally setting discrimination 
in concrete” (ibid.).27

In response to the testimony from the Michigan 
Advisory Committee, Representative Conyers asked 
the subcommittee’s permission to review the mate­
rials suggesting the existence of racial discrimination 
in the distribution of project funds and then to dis­
cuss the matter with the subcommittee. Subcommit­
tee Chairman Roe agreed (Hearings, at 837) to 
allow Representative Conyers to meet with the sub­
committee after the upcoming weekend and to express 
his views concerning the Michigan data at that time. 
On Monday, February 7, 1977, Representative Con­
yers appeared before the subcommittee to comment 
on the evidence of “the racially discriminatory im­

27 Frank Steiner, a staff representative of the Civil Rights 
Commission who accompanied Terry at the hearing, testified 
(Hearings, at 830) that

it is traditionally and generally understood that unem­
ployment rates among minority groups have been gen­
erally twice what they have been among whites, and 
particularly so in areas that are all minority or predomi­
nantly minority.

So we would assume that the level of statistical sig­
nificance of these correlations between LPW funding 
levels and minority percent of population would probably 
be another order of magnitude more significant, and 
doubled perhaps, if based on unemployment data as base 
data.

Steiner also stated that the bias identified by the Michigan 
Advisory Committee was a racial one, not one based on the 
urban or rural character of the funded areas or the size of 
the areas’ population. “It is clearly race and it is statistically 
significant as race,” Steiner said (ibid,.).



45

pact of public works grants in the state of Michi­
gan” (id. at 937). After discussing some of the 
probable reasons for the disproportionate distribu­
tion of 1976 project funds to communities with low 
minority populations (Hearings, at 937-938), Rep­
resentative Conyers informed the subcommittee that 
he had been “contacted by individuals who believe 
that minorities and women have been deprived of 
employment and contracting opportunities on LPW- 
funded projects” (id. at 939). Representative Con­
yers stated that he had not had time to investigate 
the allegations but that “the historical pattern of 
discrimination within the construction industry lends 
credence to their charges” (ibid.). He promised to 
study the subject further and, if it appeared that 
minorities and women did suffer discrimination under 
Round I of the local public works program, to pro­
pose an amendment to strengthen the nondiscrimina­
tion provisions in Title VI of the 1964 Civil Rights 
Act and in Section 110 of the 1976 Local Public 
Works Act, 42 U.S.C. 6709.

Two and a half weeks later, during floor debate 
on H.R. 11, Representative Mitchell moved to amend 
the bill by adding a minority business enterprise pro­
vision very similar to the one ultimately enacted into 
lav/. 123 Cong. Rec. H1436 (daily ed. Feb. 24, 
1977).28 He explained (ibid.) that “all this amend-

28 As initially introduced, the provision stated:
Notwithstanding any other provision of law, no grant 
shall be made under this Act for any local public works 
project unless at least 10 per centum of the dollar volume



46

merit attempts to do is to provide that those who are 
in mi nority businesses get a fair share of the action 
from this public works legislation.” Representative 
Mitchell also described how the 10% set-aside would 
complement existing federal efforts to aid minority 
businesses. He stated (id. at H1436-H1437):

We spend a great deal of Federal money under 
the SRA program creating, strengthening and 
supporting minority businesses and yet when it 
comes down to giving those minority businesses 
a piece of the action, the Federal Government is 
absolutely remiss. All it does is say that, “We 
will create you on the one hand and, on the other 
hand, we will deny you.” That denial is made 
absolutely clear when one looks at the amount 
of contracts let in any given fiscal year and then 
one looks at the percentage of minority contracts. 
The average percentage of minority contracts, 
of all Government contracts, in any given fiscal 
year, is 1 percent—1 percent. That is all we 
give them. On the other hand we approve a bud­
get for OMBE, we approve a budget for the SBA

of each contract shall be set aside for minority business 
enterprise and, or [sic], unless at least 10 per centum 
of the articles, materials, and supplies which will be used 
in such project are procured from minority business 
enterprises. For purposes of this paragraph, the term 
“minority business enterprise” means a business at least 
50 percent of which is owned by minority group members 
or, in case of publicly owned businesses, at least 51 per­
cent of the stock of which is owned by minority group 
members. For the purposes of the preceding sentence, 
minority group members are citizens of the United States 
who are Negroes, Spanish-speaking, Orientals, Indians, 
Eskimos, and Aleuts.



47

and we approve other budgets, to run those mi­
nority enterprises, to make them become viable 
entities in our system but then on the other hand 
we say no, they are cut off from contracts.

Characterizing the MBE provision as “the only way 
we are going to get the minority enterprises into 
our system,” Representative Mitchell urged that his 
amendment be adopted, “because to the extent we are 
willing to let minorities do business with the govern­
ment, we will be able to reduce survival support 
programs now paid for by the Federal Government” 
{id. at H1437). He concluded by stating that the 
minority set-aside was designed “to begin to redress 
this grievance that has been extant for so long” and 
“to give [local political subdivisions] the added im­
petus to do those things which are right and fair” 
{id. at H1440).

Representative Biaggi spoke in support of the 
Mitchell amendment. He stated (123 Cong. Rec. 
H1440 (daily ed. Feb. 24, 1977)):

This Nation’s record with respect to providing 
opportunities for minority businesses is a sorry 
one. Unemployment among minority groups is 
running as high as 35 percent. Approximately 
20 percent of minority businesses have been dis- 
olved [sic] in a period of economic recession.

s|s sf:

[W]ithout adoption of this amendment, this leg­
islation may be potentially inequitable to minor­
ity businesses and workers. It is time that the 
thousands of minority businessmen enjoyed a sense



48

of economic parity. This amendment will go a 
long way toward helping to achieve this parity 
and more importantly to promote a sense of eco­
nomic equality in this Nation.

Representative Conyers added (ibid.) that “minority 
contractors and businessmen who are trying to enter 
in on the bidding process * * * get the ‘works’ almost 
every time. * * * The sad fact of the matter is that 
minority enterprises usually lose out, and * * * 
through no fault of their own simply have not been 
able to get their foot in the door.” See also id. at 
H I423 (remarks of Rep. Stokes).

The House agreed to the proposed MBE provision 
after amending it to make clear that the Secretary 
of Commerce was authorized to waive the 10% minor­
ity requirement in project areas where sufficient mi­
nority contractors and material suppliers were not 
available (123 Cong. Ree. H1437-H1438 (daily ed. 
Feb. 24, 1977)). The amended version of Representa­
tive Mitchell’s proposal also specified that “10 percent 
of the amount of each grant shall be expended for 
minority business enterprises” ; this language was 
substituted in place of the requirement in the original 
version of the MBE provision that 10% of “the dollar 
volume of each contract” should be set aside for mi­
nority businesses and 10% of the “article, materials 
and supplies” used in each project should be procured 
from such firms (ibid; see note 28, supra). Later the 
same day, the House passed H.R. 11 (123 Cong. Rec. 
H1461-H1462 (daily ed. Feb. 24, 1977)).



49

During the Senate’s consideration of its version 
of the 1977 Public Works Employment Act, Senator 
Brooke moved to amend the bill by adding a provision 
requiring that 10% of the “articles, materials and 
supplies” used in any local public works project be 
procured from minority business enterprises. 123 
Cong. Rec. S3910 (daily ed. Mar. 10, 1977). In sup­
port of the amendment, Senator Brooke stated that 
such a provision is “a legitimate tool to insure par­
ticipation by hitherto excluded or unrepresented 
groups” {ibid.; emphasis added). The Senator also 
said that the 10% set-aside measure was necessary 
“because minority businesses have received only 1 
percent of the Federal contract dollar, despite re­
peated legislation, Executive orders and regulations 
mandating affirmative efforts to include minority con­
tractors in the Federal contracts pool” {ibid.). Sen­
ator Brooke’s amendment was adopted and included 
in S.427 as it passed the Senate {id. at S3910, S3926- 
S3929).

Without commenting on the matter, the Conference 
Committee adopted the House version of the MBE 
provision. S. Conf. Rep. No. 95-110, 95th Cong., 1st 
Sess. (1977); H.R. Conf. Rep. No. 95-230, 95th Cong., 
1st Sess. (1977). The Senate and the House passed 
the bill as reported by the Conference Committee, 
and Representative Mitchell’s proposal became law. 
123 Cong. Rec. S6755-S6757 (daily ed. Apr. 29, 
1977): id. at H3920-H3935 (daily ed. May 3, 1977).

The limited legislative history of the MBE pro­
vision thus shows that the measure was intended to en­



50

sure that minority businesses would not be excluded 
from the benefits of the 1977 public works program 
solely on the basis of past obstacles to minority entry 
into the construction industry. Although the reasons 
for the restricted opportunities available to minority 
contractors before 1977 and the disproportionately 
small participation of minority businesses in the na­
tional economy were not rehearsed in the committee 
reports or floor debates, Congress was fully aware of 
the background of discrimination that had affected and 
continued to affect both the construction industry and 
many other segments of the American economy. The 
tone of the floor discussion, as well as Representa­
tive Conyer’s reference in the House hearing to “the 
historical pattern of discrimination within the con­
struction industry” (see page 45, supra), bears 
witness to Congress’ familiarity with the problem 
of discrimination against blacks and other minorities. 
Congress’ recognition of the debilitating impact of 
discrimination on the prospects of minority-owned 
businesses is amply demonstrated not only by the very 
fact of Section 103(f) (2) ’s inclusion in the 1977 
Act but also by the history of previous congressional 
efforts to prevent such discrimination and to remedy 
its effects. Petitioners do not contend that this dis­
crimination did not occur, and indeed they offer no 
satisfactory explanation for the dismal share of con­
struction contracting work performed by minority 
firms. In light of the full legislative background, the 
congressional purpose emerges with clarity. As the 
Third Circuit held in Constructors Ass’n of West­



51

ern Pennsylvania v. Kreps, supra, 573 F.2d at 817 
(footnotes omitted), the MBE provision

was designed to “begin to redress” what Con­
gress perceived to be the continuing economic 
impact of racial discrimination. Such a purpose 
might well be sufficient to allow the legislature 
to take notice of findings by the government in 
other aspects of the national anti-discrimination 
effort to the effect that minority contractors 
labor under handicaps requiring remedial action. 
Moreover, the debates in connection with the 
MBE set-asides evidence a Congressional deter­
mination that other attempts to encourage mi­
nority businesses have not proved successful.1293

C. The MBE Provision Is A Constitutionally Permissible 
Means By Which Congress May Seek to Eliminate 
The Effects of Discrimination in the Construction 
Industry

1. In responding to the second part of petitioners’ 
attack on the minority business enterprise provision, 
we again begin by emphasizing the special role of 
Congress in developing appropriate remedial measures 
to redress the effects of past racial and ethnic dis­
crimination. This Court recognized long ago in Mc- 29

29 The congressional determination that more concrete re­
medial measures are required is shared by the Executive 
Branch. President Carter has directed that expanded efforts 
be made by all federal agencies to strengthen minority busi­
ness development through increased federal deposits in 
minority-controlled banks and by encouraging greater partici­
pation of minority-owned enterprises in supplying the govern­
ment’s procurement needs. See 13 Weekly Comp, of Pres. Doc. 
511 (Apr. 8, 1977) ; id. at 1333 (Sept. 12, 1977).



52

Culloch v. Maryland, 17 U.S. (4 Wheat.) 316, 420 
(1819), that when Congress exercises its powers un­
der the Constitution, its determination concerning 
the need for legislation and the proper method of 
accomplishing legislative goals is entitled to sub­
stantial deference. This general principle applies with 
particular force when Congress acts to enforce the 
guarantees of the Civil War Amendments. Those 
Amendments, through their explicit grant of legisla­
tive enforcement power, authorize Congress “to ex­
ercise its discretion in determining whether and what 
legislation is needed” to eliminate present discrimina­
tion and the continuing effects of past discrimination. 
Katzenbach v. Morgan, supra, 384 U.S. at 651.

The framers of the Civil War Amendments wisely 
entrusted this enforcement responsibility to Congress. 
In our system of separation of powers, Congress is 
the branch of government best suited to determine 
whether broadly applicable remedial action is needed 
and, if so, what legislative measures are most appro­
priate in light of all the relevant considerations. Con­
gress’ special ability to gather and evaluate a wide 
range of factual information provides an immeasur­
able advantage in the formulation of remedial meas­
ures that are likely not only to achieve their immediate 
objectives but also to do so without jeopardizing other 
important values. See Cox, Foreword: Constitutional 
Adjudication and the Promotion of Human Rights, 80 
Harv. L. Rev. 91, 106-107 (1966).

In redressing the effects of discrimination against 
minorities, for example, Congress is the body best



53

able to devise meaningful forms of relief for victim­
ized groups while at the same time accommodating 
the legitimate interests of persons who have neither 
discriminated nor suffered discrimination and who 
claim an entitlement to government benefits. Con­
gress’ role as the most representative of the three 
branches of government makes it the appropriate 
forum in which to balance these competing interests.

Moreover, a legislative compromise, once reached, 
endures only as long as a more desirable solution to 
the particular problem at hand does not commend 
itself to a majority of Congress. Congressional ef­
forts to remedy discrimination therefore possess the 
dual virtue of being both the best available approxima­
tion of majority will at the time of enactment and 
readily subject to modification or discard in light 
of increased experience or changed circumstances. 
See Monaghan, Foreword: Constitutional Common 
Law, 89 Harv. L. Rev. 1, 28-29 (1975).

For these reasons, courts reviewing the constitu­
tionality of legislation intended to further the pur­
poses of the Civil War Amendments should be re­
luctant to disturb the balance struck by Congress. 
The rule of “presumptive invalidity” advocated by 
petitioners (Pet. Br. 9-10) is inappropriate. When 
Congress seeks to remedy the effects of discrimina­
tion, a statutory racial classification should be sus­
tained if Congress has reason to believe that such a 
measure is necessary to accomplish the legislative 
goal and if the statute is designed to moderate the 
adverse effects of the classification on persons argu­



54

ably not involved in past discrimination. Such a 
standard recognizes Congress’ special role under the 
Civil War Amendments and preserves the flexibility 
that the Legislative Branch needs to carry out its 
constitutional responsibilities.

2. Congress properly determined that the 10% mi­
nority set-aside provision in the Public Works Em­
ployment Act of 1977 was necessary to ensure that 
the effects of discrimination in the construction indus­
try would not be carried forward in projects fund­
ed under the Act. Previous legislative measures to 
prohibit the kinds of discrimination that have oc­
curred in the industry and to eliminate the effects of 
such discrimination in federally funded programs 
had not succeeded in achieving their goals. The anti- 
discrimination provisions in 42 U.S.C. 1981, Titles 
VI and VII of the Civil Rights Act of 1964, and the 
Equal Credit Opportunity Act (15 U.S.C. 1691 et 
seq.) had made little progress, by 1977, toward in­
creasing the participation of minority business en­
terprises in the national economy, and the results 
in the construction industry had been particularly 
disappointing. Specific legislation enacted to help 
minority-owned businesses obtain financing and bond­
ing (see, e.g., 15 U.S.C. 694a and 694b) had been 
similarly ineffective. When Congress enacted the 
MBE provision, the available information all con­
firmed that the role of minority businesses in the 
construction industry and in federal, state, and local 
contracting generally was extraordinarily small.

Moreover, because the primary objective of the



55

1977 Act was to stimulate the economy by quickly 
introducing four billion additional dollars in federal 
funds into the construction industry, Congress could 
not afford to wait until the existing statutes for the 
benefit of minority businesses had produced their in­
tended results. In order to achieve its economic goals, 
Congress had to act with dispatch. The need for 
haste is evidenced by the statutory provisions requir­
ing the appropriated funds to be distributed on an 
expedited basis.30

In light of the speed with which the local public 
works program was to be implemented, Congress 
recognized that some special measure was necessary 
to ensure that minority firms would participate sig­
nificantly in the benefits to be derived from the fed­
eral funds. Prospective antidiscrimination provisions

30 The appropriations acts for the funds authorized in 1976 
and 1977 both required that the federal monies be committed 
to state and local grantees by September 30, 1977, the end 
of fiscal year 1977. 90 Stat, 1497; 91 Stat. 122. The 1977 
Act provided that, with certain limited exceptions, the 
grantees that would receive the newly authorized four billion 
dollars should be selected on the basis of applications filed by 
December 23, 1976, i.e., applications filed under Round I of 
the local public works program. 42 U.S.C. (Supp. I) 6707 (h) ; 
13 C.F.R. 317.30. In addition to relying for the most part on 
existing applications in order to avoid the delay entailed in 
the preparation of new ones, Congress retained the provision 
in the 1976 Act that required the Secretary to “make a final 
determination with respect to each application * * * not later 
than the sixtieth day after the date he receives such applica­
tion.” 42 U.S.C. (and Supp. I) 6706; 13 C.F.R. 317.74(e). 
Finally, Congress also retained the requirement that each 
applicant give satisfactory assurance that on-site work would 
begin within 90 days of project approval. 42 U.S.C. 6705(d).



56

and government loan or bonding assistance were not 
good enough; they simply could not produce mean­
ingful change within the time limits of the public 
works program. Without some positive legislative 
action to guarantee a place for minority contractors 
in funded project construction, minority firms would 
have been largely excluded from the local public 
works program and the effects of past discrimina­
tion in the industry would have been perpetuated 
and reinforced. In these circumstances, Congress had 
little choice but to adopt a statutoiy provision direct­
ly addressed to the subject of minority participation 
in the contracting work that would be generated by 
the newly authorized federal grants. Rather than af­
firmatively compelling nonminority contractors to 
change their subcontracting practices (cf. Albemarle 
Paper Go. v. Moody, supra, 422 U.S. at 425), Con­
gress offered them a substantial incentive to do so. 
Prime contractors willing to agree with state and 
local grantees that, where possible, 10% of project 
funds would be expended “for minority business en­
terprises” thereby became eligible to reap the finan­
cial benefits of participation in the federally funded 
public works program. The MBE provision, in short, 
was a reasonable, narrowly focused legislative re­
sponse to a difficult problem that could not have been 
solved in any other way, given the temporal con­
straints within which Congress was forced to operate 
in order to achieve its economic aims.

Nor is the MBE provision subject to criticism on 
the ground that the benefited group may include



57

some persons who were not themselves the victims 
of discrimination. Especially in light of the sub­
stantial time pressure, a general rule like the 10% 
minority set-aside was the best that Congress could 
devise. Moreover, even if additional time had been 
available, Congress cannot perform the role that a 
court plays in identifying individual victims of dis­
crimination in individual lawsuits. The nature of 
the legislative process requires that Congress act by 
reference to categories of persons, and statutes are 
not unconstitutional merely because their benefici­
aries include some persons not as deserving as the 
ones Congress sought to assist. See Gaston County 
v. United States, supra; Oregon v. Mitchell, supra, 
400 U.S. at 147 (opinion of Douglas, J . ) ; id. at 216 
(Harlan, J., concurring in part and dissenting in 
p a r t) ; id. at 233-236 (Brennan, White, and Marshall, 
JJ., concurring in part and dissenting in p a r t) ; id. 
at 284 (Stewart, J., concurring in part and dissent­
ing in p a r t) ; EEOC v. American Telephone & Tele­
graph Co., 556 F.2d 167, 177 (3d Cir. 1977), cert, 
denied, 438 U.S. 915 (1978). Cf. Califano v. Web­
ster, supra?1 3

3i This is not a case like Craig V. Boren, 429 U.S. 190, 198 
(1976), in which a gender classification was used as an 
inaccurate proxy for other, more precise categories that the 
legislature could have employed to achieve its legitimate goals. 
Here, minority status is not a substitute but is the only classi­
fication that can be used, because the congressional objective 
in enacting the MBE provision was the elimination of the 
effects of past discrimination. Cf. Califano V. Webster, supra 
(gender-based classifications upheld where utilized to remedy 
the effects of gender-based discrimination).



58

3. Congress designed the MBE provision so that 
it would have no more than a minimal adverse ef­
fect on nonminority contractors arguably not re­
sponsible for discrimination in the construction in­
dustry. This Court has recognized that, in order to 
remedy the wrongful exclusion of minorities from 
economic and social benefits, some “sharing of the 
burden of the past discrimination” may be necessary. 
Franks v. Bowman Transportation Co., 424 U.S. 747, 
777 (1976). Even the most carefully tailored reme­
dial measure may sometimes have an adverse impact 
on the legitimate interests of nonminorities. United 
Jewish Organizations v. Carey, supra; Regents of the 
University of California v. Bakke, supra, 438 U.S. 
at 366 n.41 (opinion of Brennan, White, Marshall, 
and Blackmun, JJ .) .32 This alone does not render a 
racial classification unconstitutional. Rather, when 
Congress uses race or ethnic background as a dis­
tinguishing factor in an effort to eliminate the ef­
fects of present or past discrimination, the critical 
inquiry is whether the means chosen to accomplish 
the legislative goal strike an acceptable balance be­
tween the nonminority interests at stake and the need

32 Mr. Justice Powell also concluded in Bakke that a univer­
sity could properly take race into account in its admissions 
policy in order to promote diversity within the academic com­
munity. Thus, a majority of the Court has agreed that a race­
conscious program is not unconstitutional solely because it 
has some adverse effect on nonminorities—who necessarily 
would be disadvantaged to some extent by an admissions pro­
gram that considered race as a positive factor, regardless of 
the reasons for that policy.



for an effective remedial measure, Cf. Steelworkers 
v. Weber, supra, slip op. 12-13; Regents of the 
University of California v. Bakke, supra, 438 U.S. 
at 369-379 (opinion of Brennan, White, Marshall, 
and Blackmun, JJ.).

The MBE provision in the Public Works Employ­
ment Act of 1977 properly accommodates the com­
peting interests of minority and nonminority busi­
nesses. It ensures meaningful minority involvement 
in the construction of federally funded public works 
projects and at the same time imposes only a very 
limited disadvantage on nonminority contracting 
firms.

As the court of appeals concluded (A. 221a), the 
MBE provision “extends to only .25 percent of funds 
expended yearly on construction in the United States 
* * * [and] the burden of being dispreferred in .25 
percent of the opportunities in the construction in­
dustry was thinly spread among nonminority busi­
nesses comprising 96 percent of the industry.” 33 The

83 The court of appeals’ calculation of the percentage of 
total annual construction work represented by minority par­
ticipation in the public works program should be viewed as 
an approximation, not an exact finding. The 0.25% figure 
appears to be based on the assumption that precisely 10% 
of the funds appropriated under the 1977 Act, or 400 million 
dollars, were spent for minority business enterprises. In fact, 
of course, minority contractors participating in some public 
works projects received more than 10% of the total project 
grant, while other projects did not involve any minority 
participation because the unavailability of qualified minority 
contractors in the appropriate market areas led to the appli­
cation of the Secretary’s waiver rule. See page 62, infra. 
Similarly, the court of appeals’ calculation of the percentage

59



60

program does not foreclose any nonminority firm 
from competing with minority firms. Contrary to 
petitioners’ assertion (Pet. Br. 24), the effects of the 
MBE provision are not concentrated in any identi­
fiable nonminority group. Nonminorities are not ex­
cluded from any particular 10% of the funded work. 
The minority business requirement may be satisfied by 
a grantee’s entering into a prime contract with a 
minority firm or by a prime contractor’s letting sub­
contracts or supply contracts to minority firms for 
any portion of the project work or materials. Thus, 
in competing for each contract, a nonminority bidder 
is not “foreclosed from all consideration * * * simply 
because he was not the right color or had the wrong 
surname.” Regents of the University of Califor­
nia v. Bakke, supra, 438 U.S. at 318 (opinion of 
Powell, J .). Nor does the program operate “to stig­
matize or single out any discrete and insular, or even 
any identifiable, nonminority group.” Id. at 374 
(opinion of Brennan, White, Marshall and Blackmun, 
JJ .) .* 34

of minority businesses in the construction industry is also a 
reliable but inexact approximation. See note 24, supra.

34 The Pacific Legal Foundation, in its brief as amicus 
curiae (Amicus Br. 17-21), contends that the MBE provision 
is an illegal bill of attainder because it singles out non­
minority contractors for punishment. This contention was 
not presented to the courts below or in the petition for a writ 
of certiorari, and therefore is not properly before this Court. 
See, e.g., General Pictures Corp. V. Western Electric Co., 304 
U.S. 175, 177-178 (1938) ; Lawn V. United States 355 U.S. 
339, 362 n.16 (1958). In any event, because the MBE require-



61

While some nonminority firms may lose some con­
tracts because of the operation of the MBE provision, 
they are not foreclosed from operating their busi­
nesses.35 They do not suffer the same kind of exclu­
sion from their desired occupation as that suffered by 
the plaintiffs in Regents of the University of Cali­
fornia v. Bakke, supra, and Steelworkers v. Weber, 
supra. The MBE provision, which assures minority 
participation in one, temporary, federally financed 
state and local public works program, affecting only 
one sector of the construction industry, does not entail 
any total exclusion of nonminorities.

Nonminorities have lost no right or legitimate ex­
pectation by the addition of Section 103(f) (2) to the 
1976 Act. Cf. Katzenbach v. Morgan, supra, 384 U.S. 
at 657. If Congress had not established the 1977 pub­
lic works program or had omitted the MBE provision 
from the new authorization but appropriated 10%

ment can be satisfied by any service, supply, or construction 
contract and does not foreclose any nonminority contractor 
from continuing in business or from bidding on any contract 
let under the local public works program, Section 103(f) (2) 
is not “a legislative enactment barring designated individuals 
or groups from participation in specified employments or 
vocations.” Nixon V. Administrator of General Services, 
433 U.S. 425, 474 (1977). Moreover, because of the important 
remedial purposes served by the MBE provision, it is clear 
that “viewed in terms of the type and severity of burdens 
imposed,” the statute “reasonably can be said to further 
nonpunitive legislative purposes.” For that reason, it is not a 
bill of attainder. Id. at 475-476.

35 Indeed, no nonminority plaintiff testified that it had lost 
a contract as a result of competition with minority contractors.



less money, nonminority contractors would not have 
benefited in any way.

Moreover, the waiver procedure authorized by the 
statute and implemented by the Secretary’s regulations 
and guidelines ensures flexibility.36 The availability 
of a waiver depends on three factors: (1) the number 
of qualified minority-owned businesses in the relevant 
area that are available to perform project work or 
provide necessary supplies; (2) proof of good-faith 
efforts by a grantee and prime contractor to find and 
use such businesses; and (3) the size of the area’s 
minority population (A. 165a-167a).37 These criteria

36 Under internal directives issued by the Economic Develop­
ment Administration, the Secretary considers additional cri­
teria in those cases in which state or local grantees originally 
report minority firm contracts sufficient to comply with the 
MBE provision, but during the course of construction some 
of the expected minority participation fails to occur. If the 
reduced minority participation is caused by the inability of 
the minority firm to complete its contract, the Secretary also 
considers: (1) the reasons the firm could not complete per­
formance; (2) the extent of assistance provided to the firm 
by the grantee or prime contractor, such as aid in obtaining 
bonding or working capital or in meeting union require­
ments; and (3) the extent of efforts to obtain a substitute 
minority contractor. If, however, the reduced participation is 
caused by the Secretary’s determination that a firm is not a 
bona fide minority enterprise, the additional criteria are (1) 
whether the grantee or prime contractor reasonably believed 
the enterprise was an MBE; and (2) the extent of efforts 
to obtain a substitute minority firm.

37 We are informed by the EDA that 1261 waivers were 
granted as of September 9, 1979, under Round II of the local 
public works program. Seven of these were granted in con­
nection with projects for which respondent New York State 
was the grantee, and six were granted in connection with proj­
ects for which the grantee was respondent New York City.

62



63

are similar to those employed in setting goals for en­
forcement of the affirmative action requirements of 
Exec. Order No. 11246.38

Because the 1976 and 1977 Acts established a nation­
wide program for the construction, modification, and 
repair of local public works, Congress needed to adopt 
a general rule for the benefit of minority businesses. 
Detailed comparative statistics on business owner­
ship are not available on a local basis,39 and in any

38 30 Fed. Reg. 12319 (1956), as amended by Exec. Order
No. 11,375, 32 Fed. Reg. 14303 (1967), and Exec. Order No. 
12,086, 43 Fed. Reg. 46501 (1978). Under these Executive 
Orders, federal contractors are directed to consider a series 
of eight factors in “determining whether minorities are being 
underutilized in any job group * * 41 C.F.R. 60-2.11
(b) (1). The factors include:

(i) The minority population of the labor area sur­
rounding the facility;

(ii) The size of the minority unemployment force 
in the labor area surrounding the facility;

(iii) The percentage of the minority work force as 
compared with the total work force in the immediate 
labor area;

(iv) The general availability of minorities having 
requisite skills in the immediate labor area;

(v) The availability of minorities having requisite 
skills in an area in which the contractor can reasonably 
recruit;

(vi) The availability of promotable and transferable 
minorities within the contractor’s organization;

(vii) The existence of training institutions capable of 
training persons in the requisite skills; and

(viii) The degree of training which the contractor 
is reasonably able to undertake as a means of making 
all job classes available to minorities.

39 See, e.g., Civil Rights Commission Report, supra, note 
21, at x.



64

event Congress could not have hoped to anticipate all 
the variations that the Secretary would encounter in 
administering the public works program. Recognizing 
that the general 10% rule might not be appropriate 
for certain projects or certain locations, Congress 
delegated to the Secretary the task of adapting the 
minority set-aside requirement to specific situations 
that arose in the course of the program’s administra­
tion. The Secretary discharged this responsibility 
through the waiver procedure, and petitioners do not 
contend that waivers were unfairly denied.

The short-term emergency nature of the public 
works program, the lack of any total exclusion of non­
minority contractors from competition for any par­
ticular contract, and the availability of the waiver 
procedure all serve to distinguish the 10% minority 
set-aside from the medical school admissions procedure 
rejected by a majority of the Court in Bakke. The 
short-term nature of the program meant that the im­
pact of the MBE provision was limited from its in­
ception. Whatever the successes or failures of the 
10% set-aside, the measure was only temporary and 
Congress would have been obliged to review the record 
and legislate again before the provision’s effective 
period could have been extended. In addition, al­
though the 10% MBE requirement had to be satis­
fied with respect to each public works project viewed 
as a whole, the lack of any total exclusion of nonmi­
nority businesses meant that, on any given contract, 
a grantee or prime contractor could prefer a nonmi­
nority bidder if it regarded that bidder as superior to



65
qualified minority bidders. Finally, the MBE provi­
sion imposed no obligation to spend federal funds on 
minority businesses, regardless of their qualifications. 
The availability of the waiver procedure meant that, 
where qualified minority firms could not be located in 
the applicable project area, the 10% set-aside require­
ment would not be enforced and public works con­
struction could proceed unhampered by an imprac­
tical requirement that funds be expended for non­
existent or unqualified minority firms.

Petitioners contend (Pet. Br. 26-27; GBC Br. 24- 
31), however, that the MBE provision is unconstitu­
tional because Congress could have found other means 
of aiding minority businesses that would have been 
“less drastic.” Petitioners suggest, for example, that 
a minority education and training program or a 
minority bonding program would have been a “less 
drastic” means of remedying the effects of discrimi- 
ation against minority businesses. But petitioners 
wholly fail to demonstrate why such programs would 
be “less drastic” in a constitutional sense. All of the 
alternative approaches recommended by petitioners 
would require the use of race or national origin as a 
selection criterion. Petitioners’ programs therefore 
could not be distinguished, in any principled way, 
from the MBE provision they deplore. The proposals 
would be “less drastic” only in the sense that any 
adverse effect on nonminority groups would be more 
likely to fall on persons and businesses that are not 
members of petitioner associations—for example, non­
minority contractors in need of special financing help



66

or training to gain entry into the construction in­
dustry.

A slightly different approach, also preferred by peti­
tioners (GBC Br. 29-31), is that embodied in the 
recent revision of Section 8(d) of the Small Business 
Act, 15 U.S.C. 637(d). The new version of Section 
8(d) (added by Section 211 of the 1978 amend­
ments, Pub. L. No. 95-507, 92 Stat. 1767-1770) de­
clares it to be the policy of the United States that 
“small business concerns, and small business concerns 
owned and controlled by socially and economically 
disadvantaged individuals, shall have the maximum 
practicable opportunity to participate in the perfor­
mance of contracts let by any Federal agency.” 
Government prime contractors must agree to cooper­
ate with this policy, “to the fullest extent consistent 
with the efficient performance” of their contracts, 
by awarding subcontracts to firms controlled by “so­
cially and economically disadvantaged individuals.” 
Although prime contractors are directed to “presume 
that socially and economically disadvantaged individ­
uals include Black Americans, Hispanic Americans, 
Native Americans, and other minorities,” petitioners 
maintain (GBC Br. 29-31) that the program es­
tablished by the recent amendments is preferable to 
the MBE provision because other individuals found 
to be disadvantaged are eligible.40

40 See Section 201 of the amendments, adding a new Section 
2(e) to the Small Business Act (92 Stat. 1760; to be codified 
in 15 U.S.C. 631 ( e ) ) (congressional finding that many per­
sons are socially and economically disadvantaged “because



67
Petitioners’ argument misses the point. In enact­

ing the MBE provision, Congress chose a race- 
conscious method to remedy discrimination against 
minorities and to prevent its effects from being per­
petuated in one short-term federal grant program. 
The Small Business Act amendments, by contrast, 
are designed to achieve a broader, long-range legis­
lative goal. Of course, this is not to say that Con­
gress abandoned its concern for minorities when it 
enacted the 1978 amendments. Indeed, that concern 
is explicitly reflected in the new statute.41 But Con­
gress went considerably further and established a 
continuing program intended not only to remedy dis­
crimination against minority-owned businesses but 
also to increase the participation of businesses owned 
by disadvantaged persons in federal procurement 
projects. When Congress enacted the MBE provision, 
it could reasonably have concluded that a program 
open to all disadvantaged persons would have been 
unlikely to accomplish the primary objective of pre­
venting the exclusion of minorities from the short­
term public works program.42 Cf. Regents of the 
University of California v. Bakke, supra, 438 U.S. 
at 376 (opinion of Brennan, White, Marshall and

of their identification as members of certain groups that have 
suffered the effects of discriminatory practices or similar 
invidious circumstances over which they have no control”).

41 A more detailed description of Pub. L. No. 95-507 may be 
found in App., infra, 8a-9a.

42 Indeed, as the district court remarked (A. 200a), all con­
struction contractors might have considered themselves eco­
nomically disadvantaged in 1977 because of the depressed 
state of the construction industry.



Blackmun, JJ .) . Furthermore, in framing remedial 
legislation, Congress was not, as petitioners appear 
to contend, required to include all persons in eco­
nomic need who might legitimately have derived bene­
fits from the public works program. Congress could 
reasonably limit its 10% set-aside plan to the groups 
that had suffered racial and ethnic discrimination. 
Cf. Katzenbach v. Morgan, supra, 384 U.S. at 657; 
South Carolina v. Katzenbach, 383 U.S. 301, 331 
( 1966).43

43 Similarly, petitioners’ argument (GBC Br. 19-21) that 
the MBE provision is unconstitutional because a 1979 Comp­
troller General’s Report identified a number of problems that 
arose during implementation of the provision is neither legally 
relevant nor factually accurate. The constitutionality of an 
Act of Congress must be judged by the information available 
at the time the statute was passed, not on the basis of an 
ex post facto analysis of the program’s successes or failures. 
Moreover, although the Comptroller General’s report, entitled 
R ep o rt To The C ongress: M in o rity  F irm s in  Local Public  
W orks P ro jects— M ixed  R esu lts  (January 16, 1979), did 
identify a number of problems that had arisen in connection 
with the MBE provision and its implementation {id. at 16-38), 
it also concluded that {id. at 7) :

Minority firms’ share of Federal funds under the second 
round of the LPW [i .e ., local public works] program was 
substantial compared with the results of past Federal 
attempts to bring the minority business sector into the 
economy’s mainstream. EDA did not have to extend the 
start of construction for many projects, and only about 
one of every five projects had construction delays because 
of difficulties with using minority firms. Thus, a primary 
purpose of the minority provision—to give more Federal 
funds to minority firms—was achieved without significant 
delays to the start of LPW projects.

*  *  *  *  *

Other benefits resulted from using minority firms on 
public works projects. New minority firms were estab­
lished, and existing firms gained experience. Some prime

68



69
D. The Minority Business Enterprise Provision Does Not 

Violate Title VI Of The Civil Rights Act of 1964

Petitioners are incorrect in their argument that a 
statute enacted by Congress in 1977 conflicts with 
another federal statute passed 13 years earlier and 
therefore must fall. The MBE provision and Title VI 
of the Civil Rights Act are far from irreconcilable. 
As one court has said in rejecting the contention now 
advanced by petitioners, “there is no inherent incon­
sistency between a requirement that contracting be 
done without discriminatory consideration of race 
and a requirement that every good faith effort be 
used to achieve minority participation pursuant to 
legislative mandate in grant funds.” Constructors 
Ass’n of Western Pennsylvania v. Kreps, 441 F. 
Supp. 936, 954 (W.D. Pa. 1977), aff’d, 573 F.2d 
811 (3d Cir. 1978). Congress has given no indication 
that the two statutes are incompatible. On the con­
trary, by incorporating the enforcement procedures 
of Title VI into the 1976 Act’s provision forbidding- 
sex discrimination in the local public works program 
(42 U.S.C. 6709), a provision retained without change 
after the 1977 amendments, Congress showed that 
it did not perceive any disharmony between the two 
statutes. In the absence of some evidence that Con­
gress itself recognized a tension between the MBE 
provision and Title VI, the teaching of this Court in 
Morton v. Mancari, 417 U.S. 535, 551 (1974), must

contractors found that minority firms performed ade­
quately and would be given the opportunity to compete 
on future subcontract work. In addition, minority firms 
which obtained contracts on LPW projects were able to 
provide employment for minority workers.



70

control. Mancari held that “ [t]he courts are not at 
liberty to pick and choose among congressional enact­
ments, and when two statutes are capable of coexist­
ence, it is the duty of the courts, absent a clearly 
expressed intention to the contrary, to regard each as 
effective.”

Even if there were a conflict between the general 
provisions of Title VI and the specific MBE provision 
at issue here, that conflict should be resolved in favor 
of the later-enacted statute, the Public Works Em­
ployment Act of 1977. See Araya v. McLelland, 525 
F.2d 1194, 1196 (5th Cir. 1976). Moreover, as 
Mancari also pointed out (417 U.S. at 550-551), “a 
specific statute will not be controlled or nullified by a 
general one, regardless of the priority of enactment,”

CONCLUSION

The judgment of the court of appeals should be 
affirmed.

Respectfully submitted.

Wade H. McCree, Jr.
Solicitor General

Drew S. Days, III 
Assistant Attorney General

Lawrence G. Wallace 
Deputy Solicitor General

Peter Buscemi
Assistant to the Solicitor General

Brian K. Landsberg 
Jessica Dunsay Silver 
Vincent F. O’Rourke, Jr.

October 1979 Attorneys



l a

APPENDIX

The following materials are intended to supple­
ment the summary discussion in the body of the brief 
(pages 34-42, supra) concerning the problems en­
countered by minority businesses and the legislative 
and administrative response to those difficulties. 
Taken together, the materials establish beyond any 
doubt that the Congress that enacted the MBE pro­
vision was acutely aware of the disadvantages under 
which minority contracting firms have labored and 
continue to labor. The materials also show that Con­
gress believed that the disadvantages are at least in 
part the result of discrimination in the construction 
industry and in the economy generally. Finally, the 
materials demonstrate that the 10% minority set- 
aside provision was adopted in connection with the 
local public works program only because Congress 
recognized that existing measures designed to aid 
minority businesses were unlikely to ensure that 
minority contractors would not be unfairly excluded 
from participation in the benefits of the authorized 
federal funds.

The Appendix begins with some further statistics 
concerning the disadvantaged position of minority 
businesses and minority group members generally 
in the national economy. We then list and describe 
briefly some of the many legislative and administra­
tive measures that have been designed to assist mi­
nority businesses but that do not include any require­
ment that a specific percentage of generally available 
federal benefits be received by minority firms. Fin­



2a

ally, we reproduce a series of statements by various 
Members of Congress, all of which reflect the legis­
lative recognition of the role played by discrimination 
in retarding the growth of minority businesses.

Additional Statistical Information

In those industries that sell and produce supplies 
and equipment for construction, minority-owned 
firms are even less well represented than they are in 
the economy generally or in the construction industry 
taken as a whole (see note 24, supra). Minority- 
owned firms (which may include more than one 
establishment) in the wholesale trade industry account 
for only 1.9% of the total number of business estab­
lishments and only approximately 0.3 % of the gross 
receipts. 1972 Census of Wholesale Trade, Volume I, 
Summary and Subject Statistics, Table 1 (Aug. 
1976); 1972 Survey of Minority-Owned Business 
Enterprises, Minority-Owned Businesses, Table 1 
(May 1975) (hereinafter “Summary Volume” ). In 
the manufacturing industry, only 3.5% of the total 
number of firms are minority-owned. 1972 Census 
of Manufacturers, Volume I, Subject and Special 
Statistics, Table 3 (Aug. 1976); Summary Volume, 
Table 1.

Within the wholesale trade industry, minority- 
owned firms (which may include more than one estab­
lishment) dealing in construction, mining, logging, 
and road maintenance equipment constitute only 0.6% 
of the total number of establishments and they draw 
only 0.1% of the total sub-industry receipts. 1972



3a

Census of Wholesale Trade, Volume I, Summary and 
Subject Statistics, Table 1; Summary Volume, Table
1. In the manufacturing industry, only 0.6% of all 
firms producing construction, mining, and materials- 
handling machinery and equipment are minority- 
owned firms. 1972 Census of Manufacturers, Volume 
I, Subject and Special Statistics, General Summary 
Table 3; Summary Volume, Table 1.

The effects of discrimination against minorities are 
of course, not limited to the construction industry. 
Most of this country’s racial and language minorities 
remain poorer and less educated and suffer greater 
unemployment than the white majority. For example, 
in 1969 the percentage of families with incomes below 
the poverty level was 3 y2 times higher among black 
than among white families. The 1970 census showed 
that 8.6% of white families had incomes below the 
poverty level compared with 29.8% of black families, 
20.4% of families of Spanish heritage (U.S. Bureau 
of the Census, 1970 Census, Vol. I, Characteristics 
of the Population, United States Summary 1-400), 
and 33.3% of American Indian families (U.S. Bureau 
of the Census, Subject Report, American Indians 
Table 9 (June 1973)).

Minorities also have received less education than 
white persons. Among persons 25 years old and older, 
54.5% of whites had completed four years of high 
school or more by the time of the 1970 census. Only 
31.4% of black persons, 36.0% of persons of Spanish 
heritage, and 33.3% of American Indians had com­
pleted high school. In the same age group, 11.3% 
of all white persons had completed four years of col­



4a

lege or more, while only 4.4% of black persons, 
6.0% of persons of Spanish heritage, and 3.8% of 
American Indians had finished college. Median school 
years completed among whites were 12.1, among 
blacks and American Indians 9.8, and among per­
sons of Spanish heritage 9.6. U.S. Bureau of the 
Census, 1970 Census, Vol. 1, Characteristics of the 
Population, United States Summary, 1-386; and Sub­
ject Report, American Indians, Table 3.

In 1974, the unemployment rate among nonwhites 
was twice what it was among the white population: 
9.9% compared to 5.0%. U.S. Bureau of the Census, 
Current Population Reports, The Social and Economic 
Status of the Black Population in the United States 
197k 64 (1975). In 1976, among men of Spanish 
origin, the unemployment rate was 10.7 %; among 
women of Spanish origin, the rate was 12.5%. U.S. 
Bureau of the Census, Current Population Reports, 
Persons of Spanish Origin in the United States 10 
(March 1976).

The percent of minority group members holding- 
low-paying and low-status jobs is substantially higher 
than the comparable percentage among whites. In 
1970, only 10.2% of black persons, 13.6% of persons 
of Spanish heritage, and 14.0% of American Indians 
held professional, managerial, and administrative 
positions, compared to 23.9% of all white persons. 
Similarly, 12.0% of black persons, 11.8% of persons 
of Spanish heritage, and 12.7 % of American Indians 
held jobs as laborers, while only 5.3% of white per­
sons held similar employment. The disparity is even 
greater among service and private household workers



—28.1% of black persons, 15.1% of persons of Span­
ish heritage, and 19.2% of American Indians served 
in such capacities, but only 11.1% of white persons 
held that kind of job (1970 Census, Yol. 1 , Charac­
teristics of the Population, supra, at 1-746 to 1-748); 
Subject Report, American Indians, Table 7).

The figures for Asian-Americans (Japanese, Chi­
nese, and Filipino only) are somewhat different. The 
number of families with incomes below the poverty 
level was 8.8% (U.S. Bureau of the Census, Subject 
Reports—Japanese, Chinese, and Filipinos in the 
United States 42, 101, 160). Among Asian-Ameriean 
persons 25 years old and older, 62.2% had completed 
four years of high school and 20.4% had completed 
four or more years of college. The median number 
of school years completed by Japanese-Americans was 
12.5. Among Chinese-Americans, the comparable 
figure was 12.4, and among Filipino-Americans, 12.2 
(id. at 9, 68, and 127). 2.0% of Asian-Americans 
were unemployed (id. at 13, 72, 142). 29.1% of 
Asian-Amerieans held professional, managerial, and 
administrative positions, while 7.2% were laborers 
and 16.9% were service and private household work­
ers (id. at 31, 90, 149).

The final piece of supplementary statistical infor­
mation is derived from a survey of minority con­
struction contractors, published by the Department 
of Housing and Urban Development. The study 
reported that most minority business enterprises— 
indeed, approximately 75%—have had to rely on per­
sonal savings as the source of their original capital



6a

investment. A Survey of Minority Constmiction Con­
tractors, Office of the Assistant Secretary for Equal 
Opportunity, HUD, at 14-15. In the words of the 
survey, “individuals and institutions with equity 
money to invest have not been induced to invest in 
minority contractor enterprises” (id. at 15). Be­
cause of the relative poverty of the minority com­
munity (see page 3a, supra), it has been extremely 
difficult for minority firms to obtain initial capitaliza­
tion. See SBIC and SBLC Programs and Selected 
SB A Activities: Hearings Before the Subcomm. on 
SB A Oversight and Minority Enterprise of the House 
Comm, on Small Business, 94th Cong., 2d Sess. 208
(1976). See generally Interagency Report on the 
Federal Minority Business Development Programs, 
Office of Management and Budget (1976); Minority 
Business Opportunity Committee Handbook, Office of 
Minority Business Enterprise, Department of Com­
merce (1976).

Additional Information Concerning Government 
Programs For the Aid of Minority Businesses

The Small Business Administration has been as­
signed the task of administering a number of pro­
grams aimed at alleviating some of the problems 
encountered by minority-owned businesses. Section 
8(a) of the Small Business Act of 1958, Pub. L. No. 
85-536, 72 Stat. 389, 15 U.S.C. 637(a), empowers the 
SBA to administer a procurement program designed 
to increase the number of federal contracts per­
formed by socially and economically disadvantaged



7a

businesses, primarily minority-owned enterprises.1 
Congressional Research Service, Minority Enterprise 
and Public Policy 52 (1977) (hereinafter “CRS Re­
port” ). But according to a 1975 report published by 
the General Accounting Office,2 3 the program’s suc­
cess in enabling disadvantaged firms “to become self- 
sufficient and competitive has been minimal.”

The performance of the Section 8(a) program has 
been a subject of considerable congressional concern 
almost since the program’s inception.® In 1978, Con­

1 The Small Business Administration’s Section 8(a) pro­
gram has been upheld in the face of numerous attacks on its 
validity. See, e.g., Valley Forge Flag Co. v. Kleppe, 506 
F.2d 243 (D.C. Cir. 1974) ; Ray Baillie Trash Hauling, 
Inc. V. Kleppe, 477 F.2d 696 (5th Cir. 1973), cert, denied, 415 
U.S. 914 (1974) ; Eastern Canvas Products, Inc. V. Brown, 
432 F. Supp. 658 (D. D.C. 1977) ; Massey Services, Inc. V. 
Fletcher, 348 F. Supp. 171 (N.D. Cal. 1972) ; Fortec Construc­
tors V. Kleppe, 350 F. Supp. 171 (D. D.C. 1972). None of 
these cases addressed the constitutionality of the program.

2 Comptroller General, Report to the Congress on Question­
able Effectiveness of the 8(a) Procurement Program 7 (Apr. 
16, 1975).

3 See, e.g., Small Business and Labor Surplus Area Set- 
Asides and 8(a) Subcontracts: Hearing Before the Subcomm. 
on Government Procurement of the Senate Select Comm, on 
Small Business, 91st Cong., 2d Sess. (1970) ; SBA’s 8(a) 
Subcontracting Program: Hearings Before the Subcomm. on 
Government Procurement of the Senate Select Comm, on 
Small Business, 92d Cong., 1st Sess. (1971) ; Small Business 
Administration 8(a) Contract Procurement Program: Hear­
ing Before the Senate Select Comm, on Small Business, 94th 
Cong., 2d Sess. (1976), and related report, 95th Cong., 1st 
Sess. (1977) ; Investigation into the Section 8(a) Program of



8a

gress amended the Small Business Act in order to 
strengthen the Section 8(a) program and clarify 
the eligibility criteria for recipients of government 
assistance. See Pub. L. No. 95-507, 92 Stat. 1757. Sec­
tion 201 of the amendments (92 Stat. 1760) added 
to the statute a series of congressional findings rec­
ognizing the role of past discrimination in producing 
today’s socially and economically disadvantaged per­
sons (see note 40, supra). On the basis of these 
findings, Section 202 (92 Stat. 1761-1763) amended 
Section 8(a) of the Small Business Act to include 
express eligibility criteria defining “socially disad­
vantaged individuals” as “those who have been sub­
jected to racial or ethnic prejudice or cultural bias 
because of their identity as a member of a group 
without regard to their individual qualities.” “Eco­
nomically disadvantaged persons,” in turn, are de­
fined in the amended Act as “those socially disadvan­
taged individuals whose ability to compete in the 
free enterprise system has been impaired due to 
diminished capital and credit opportunities as com­
pared to others in the same business area who are 
not socially disadvantaged.” 92 Stat. 1762. In order 
to assist new small businesses, Section 202 authorized 
the SBA to waive the government’s usual construc­
tion contract bonding requirements in certain situa­
tions. On May 29, 1979, the SBA issued regulations

the Small Business Administration: Hearings Before the Sub- 
comm. on Federal Spending Practices and Open Government 
of the Se7iate Comm, on Governmental Affairs, 95th Cong., 1st 
& 2d Sess. (1979).



9a

implementing portions of Pub. L. No. 95-507 and 
amending in part its Section 8(a) regulations. See 
44 Fed. Reg. 30672. See also 44 Fed. Reg. 42832 
(July 20, 1979).

As we have explained in the body of the brief 
(see page 66, supra), Section 211 of the 1978 stat­
ute (92 Stat, 1767-1770) amended Section 8(d) 
of the Small Business Act to require many federal 
contractors to make affirmative efforts to let subcon­
tracts to businesses controlled by socially disadvan­
taged individuals. Section 211 also authorizes each 
federal agency, when entering into negotiated con­
tracts, “to provide such incentives as such * * * agency 
may deem appropriate in order to encourage such 
subcontracting opportunities [for small businesses 
and small businesses owned and controlled by socially 
and economically disadvantaged individuals] as may 
be commensurate with the efficient and economical 
performance of the contract.” The Office of Man­
agement and Budget has issued rules implementing 
Section 211 (44 Fed. Reg. 23610-23613 (Apr. 20,
1979)), and the SB A has issued proposed regulations 
(44 Fed. Reg. 33884 (June 13, 1979)).

In addition to the Section 8(a) program, the SB A 
administers an investment program designed to en­
courage ownership of small businesses by “persons 
whose participation in the free enterprise system is 
hampered because of social or economic disadvan­
tages * * *.” Since 1972, the program has been 
explicitly authorized by Section 301(d) of the Small 
Business Investment Act of 1958, as amended, 15



10a

U.S.C. 681(d). Between 1969 and 1972, the SB A, 
relying on its general authority under the Act, 15 
U.S.C. 661 el seq., conducted a modified version of 
the same program, limited to the encouragement of 
minority ownership of small businesses. When Con­
gress expanded the scope of the program to aid all 
businesses owned by disadvantaged persons, the SB A 
retained the separate minority enterprise program 
(the “MESBIC” program) as part of the broader 
overall scheme. See CRS Report, supra, at 51.4 5

Because of the acute problems encountered by small 
businesses, including those owned by minorities, in 
obtaining surety bonds, Congress authorized the SBA 
to establish a Surety Bond Guarantee Program that 
would cover surety companies for up to 90 percent 
of their losses on bonds issued to small businesses.6 
In addition, the last five Congresses have considered 
numerous bills dealing with the difficulties encoun­
tered by minority-owned and other small businesses

4 The program’s effectiveness has been criticized by the Gen­
eral Accounting Office. Report to the Congress by the Comp­
troller General of the United States, A  Look at H ow  the Sm all 
B usiness A d m in is tra tio n ’s In v e s tm en t C om pany P rogram  fo r  
A ss is tin g  D isadvantaged  B usinessm en  is W orking  i, ii (Oct. 
8, 1975).

5 Housing and Urban Development Act of 1970, Pub. L. No. 
91-609, 84 Stat. 1813, 15 U.S.C. 694a and 694b. (In 1970, 
the program covered contracts not exceeding $500,000. In
1974, the ceiling was doubled. In 1978, Congress again re­
vised the Surety Bond program, establishing additional statu­
tory guidelines for eligibility. See Section 111, Pub. L. No. 
95-507, 92 Stat. 1758, to be codified at 15 U.S.C. 694b).



11a

in obtaining bonding.6 These bills include Pub. L. 
No. 95-89, 91 Stat. 553, enacted August 4, 1977, 
which increased the loan and surety bond guarantee 
authority under the legislation administered by the 
SBA, and Pub. L. No. 95-619, Title VI, Section 641, 
92 Stat. 3284, enacted November 9, 1978, which 
established an Office of Minority Economic Impact 
within the Department of Energy and authorized the 
Secretary of Energy to provide loans to minority 
business enterprises to enable them to participate in 
contracting opportunities with the Department.

The Executive Branch has also sought to aid mi­
nority-owned businesses overcome “the barriers which 
now prevent many who are members of minority 
groups from controlling their fair share of American 
business.” Statement of President Nixon, accompany­
ing the issuance of Exec. Order No. 11,625, 7 
Weekly Comp, of Pres. Doc. 1404 (Oct. 13, 1971);

6 In the 91st Congress, the bills included S. 2609, 2611, H.R. 
15470, 17717, 17991, 17992, 17993, and 19819; in the 93d Con­
gress, H.R. 7829; in the 94th Congress, S. 3370; and in the 
95th Congress, H.R. 692, 2377, and S. 1442. These bills have 
been introduced in recognition of the fact that “ [t]he Federal 
government has a duty to not only remove the barriers that 
restrict minority business development, but also provide a 
little added help—a few additional opportunities—to encour­
age minority business expansion.” 124 Cong. Rec. S4168 
(daily ed. Mar. 20, 1978) (remarks of Sen. Dole). /-.Many 
other bills were also introduced during the same/ period 
to aid economically and socially disadvantaged small busi­
nesses; S. 1415 and 1941 (93d Congress); S. 2617, 3427, 
H.R. 12741, 12826, 13591, 13784, 13785, 14483, 14624, and 
14924 (94th Congress) ; and S. 607, 927, 1228, 1264, H.R. 
567, 4362, 4363, 4961, 6153, 7115, and 8912 (95th Congress).



12a
36 Fed. Reg. 19967 (1971). In 1969, Exec. Order 
No. 11,458, 34 Fed. Reg. 4937 (1969), established the 
Office of Minority Business Enterprise (OMBE) 
within the Department of Commerce. OMBE was 
charged with the tasks of developing programs and 
coordinating interagency activities to encourage the 
growth of minority business enterprises. The OMBE 
program was strengthened and expanded by Exec. 
Order No. 11,625. More recently, however, a Comp­
troller General Report to the Congress concluded 
that “OMBE’s assistance program does not appear 
to appreciably affect OMBE’s program objective of 
closing the gap between the minority population/ 
business ownership ratio.” 7

Under federal procurement regulations, all federal 
agencies must follow a minority procurement pro­
gram to ensure that adequate efforts are made to 
extend contracting opportunities to minority business 
enterprises. 41 C.F.R. 1-1.1302. At the time the MBE 
provision was enacted, federal contractors were re­
quired to agree to use “best efforts” to provide mi­
nority businesses “the maximum practicable oppor­
tunity to participate in the performance of Govern­
ment contracts.” 41 C.F.R. 1-1.1310-2 (1976).8 The

7 Report to the Congress by the Comptroller General of the 
United States, The Office o f M in o rity  B usiness E n terp rise  
Could Do M ore to S ta r t  and M ain ta in  M in o rity  Businesses, 
7 (Nov. 10, 1977).

8 This provision has recently been rescinded. See 44 Fed. 
Reg. 38478 (July 2, 1979). Congress has expanded the scope 
of the regulation: it now is directed toward increasing partici­
pation by all socially and economically disadvantaged busi­
nesses, including minority-owned businesses, in the federal



18a

effectiveness of the program was attacked in testi­
mony before the House Subcommittee on SBA Over­
sight and Minority Enterprise:

We find that in title 41, where you talk about 
the utilization of minority businesses in procuring 
contracts either in prime contractors or through 
the 8(a) program, [a contractor] has to use his 
best efforts. Well, that is a lot of baloney. Best 
efforts usually amount to looking at a directory 
of minority businesses that is usually out of date 
and they tried one or two or three and if they 
are unsuccessful then they say, we have made a 
best effort and they go on and get a majority guy 
to do the work.

Effects of New York City’s Financial Crisis on Small 
Business: Hearing Before the Subcomm. on SBA 
Oversight and Minority Enterprise of the House 
Comm, on Small Business, 94th Cong., 1st Sess. 34
(1975) (testimony of George Pattison, President of 
the Brooklyn Local Economic Development Organi­
zation).

The federal government has also attempted to pre­
vent discrimination against and to increase the par­
ticipation of minorities in state and local contracts 
funded by federal grants. The Department of Justice 
has issued a regulation to enforce Title VI of the 
Civil Rights Act of 1964, 42 U.S.C. 2000d, that pro­

procurement process. See the regulations issued by the Office 
of Federal Procurement Policy and implemented by the Gen­
eral Services Administration, 44 Fed. Reg. 23610 (Apr. 20, 
1979) ; id. at 35068 (June 18, 1979) ; id. at 38478 (July 2, 
1979).



14a

hibits recipients of federal financial assistance from 
the Department from discriminating against minori­
ties by denying them the opportunity to provide con­
tracting services for federally funded programs. See 
28 C.F.R. 42.104(b) (vi).9 In addition, the Office of 
Management and Budget has established uniform 
requirements for federal agencies in the administra­
tion of grants to state and local governments. These 
regulations were initially issued in 1971, and at the 
time the MBE provision was enacted, they provided 
(42 Fed. Reg. 45890) that recipients of federal funds 
should make

[pjositive efforts * * * to utilize small business 
and minority owned business sources of supplies 
and services. Such efforts should allow these 
sources the maximum feasible opportunity to com­
pete for contracts to be performed utilizing Fed­
eral grants funds.

The United States Civil Rights Commission indicated, 
however, that these efforts did not have a significant 
impact on the participation of minority businesses in 
federally funded state and local contracts. See the 
Commission’s Report, Minorities and Women as Gov-

9 Exec. Order No. 11,246, 30 Fed. Reg. 12319 (1965), as 
amended by Exec. Order No. 11,375, 32 Fed. Reg. 14303 
(1967), and Exec. Order No. 12,086, 43 Fed. Reg. 46501 
(1978), prohibits discriminatory hiring practices in federal 
and federally-assisted projects. In some instances, the Secre­
tary of Labor may require federal contractors to take affirma­
tive action to identify minority businesses for subcontracts.



15a

ernment Contractors 89-93 (1975).10 OMB has re­
cently revised its regulation to provide (44 Fed. Reg. 
47874 (Aug. 15, 1979)):

It is the national policy to award a fair share of 
contracts to small and minority business firms. 
Accordingly, affirmative steps must be taken to 
assure that small and minority businesses are 
utilized when possible as sources of supplies, 
equipment, construction and services.

The remainder of the revised provision lists certain 
affirmative efforts that recipients of federal funds 
are required to implement.

Statements by Members of Congress on Minority 
Business Problems and the Effects of 

Discrimination

The following remarks by several Members of 
Congress corroborate our submission that in enacting 
the MBE provision, Congress was seeking to remedy 
the effects of discrimination against minorities. Al­
though the statements reproduced below were not 
made at the time the minority set-aside provision was 
introduced and considered on the House floor, their 
frequent repetition by different legislators over a 
substantial period of time demonstrates that the sub­
ject of discrimination against minority businesses

10 For a list of some of the more than 100 federal agency 
programs providing financial, marketing, and management 
assistance to minority and other small businesses, see Office 
o f M in o rity  B usiness E n terp rise  F ederal A ssistance P rogram s
fo r  M in o rity  B usiness E n terp r ises  (U.S. Department of Com­
merce 1977).



1 6 a

was one with which Congress was both familiar and 
highly concerned. The collection of statements that 
follows is by no means exhaustive.

1. In recent hearings on bills to strengthen federal 
support for minority business enterprises, Repre­
sentative Addabbo, Chairman of the House Subcom­
mittee on Minority Enterprise and General Over­
sight, stated that “there is good reason why minority 
enterprise has not kept pace with the growth of the 
national minority population, and that reason—plain 
and simple—is discrimination.” H.R. 567, H.R. 
4960, and H.R. 2379: Hearings Before the Subcomm. 
on Minority Enterprise and General Oversight of the 
House Comm, on Small Business, 95th Cong., 1st 
Sess. 3 (1977).

2. At the same hearings, Representative Mitchell 
observed (Hearings, at 42):

As you well know, there are some minority 
companies which sort of folded overnight. They 
were doing business for the entire community 
and then suddenly the word got out that this is 
a minority-owned firm; it is owned by a black 
guy, and purchasing just stopped, which means 
that that man’s business had to be confined only 
to the minority community itself.

3. Almost 10 years ago, in debate on the Senate 
floor, Senator Bayh explained some of the problems 
confronting minority businesses generally and minor­
ity construction contractors in particular. He stated 
that, although the construction industry has long 
served as a vehicle for upward economic mobility, it



17a
“unfortunately has not generally welcomed the par­
ticipation of non-white workers and contractors.” 
116 Cong. Eec. 18886 (1970). Quoting from a letter 
written by a Department of Commerce official work­
ing in the Office of Minority Business Enterprise, 
Senator Bayh said (id. at 18888-18889):

[T]he minority contractor is severely hampered 
by the general lack of management and technical 
expertise. Because of the years of discrimination, 
minority contractors have not been able to de­
velop those skills required in the industry to be 
a successful entrepreneur. Therefore some vehi­
cle must be perfected which will provide these 
individuals with the assistance needed * *

A further excerpt from the same letter described the 
difficulties encountered by minority construction firms 
in attempting to obtain necessary bonding (id. at 
18888):

The inability of minority contractors to obtain 
bid, performance and payment bonds is one of 
the most crucial of his problems. Surety com­
panies require the minority contractor to have a 
capital liquidity of 30-100%, whereas his white 
counterpart is only required to produce 10-20%. 
The annals of history are filled with the cases of 
inequities on the part of surety companies who 
have historically refused to bond minorities in 11

11 The problems arising from minority contractors’ lack of 
adequate management and operational skills are also described 
in the Civil Rights Commission Report, Minorities and Women 
as Government Contractors 23 (1975). The problems include 
overbidding, lack of familiarity with government contracting 
regulations, and inadequate knowledge of future bidding op­
portunities.



18a

the construction industry on a parity with 
whites.1121

Senator Bayh made the same point a year earlier, 
quoting from a report by the National Business 
League (115 Cong. Rec. 19383 (1969)):

Only one-third of all Negro contractors were suc­
cessful in securing performance bonds at any 
time and all of these had experienced “undue 
difficulty” in securing them. Seventy percent re­
ported they had lost contracts because of inabil­
ity to secure bonding.

4. In a prepared statement submitted to a Senate 
committee hearing in 1976, Senator Kennedy observed:

Black construction contractors struggle [just] to 
bid on new projects going up right in the heart 
of the black community. When the firm is lucky 
enough to land a bid, unions, banks and bonding 
companies all seem to join together to guarantee 
that a minority owned firm will not land the job.

Small Business Administration 8(a) Contract Pro­
curement Program: Hearing Before the Senate Select 12

12 See also 123 Cong. Rec. S4987 (daily ed. Mar. 28, 1977) 
(remarks of Sen. Bentsen) ; Report to the Congress by the 
Comptroller General of the United States, Ways to Increase 
the Number, Type and Timeliness of 8(a) Procurement 
Contracts 8, 24-26 (1978). See generally H.R. 2377, H.R. 
2379, and Small Business Administration Activities: Hearings 
Before the Subcomm. on Minority Enterprise and General 
Oversight of the House Comm, on Small Business, 95th Cong., 
1st Sess. 80-81, 91, 93-103, 144-158 (1977) ; Selected SB A 
Programs and Activities: Hearing Before the Subcomm. on 
SBA Oversight and Minority Enterprise of the House Comm, 
on Small Business, 94th Cong., 1st Sess. 9-10, 14-15, 19-21, 40 
(1975).



19a

Comm, on Small Business, 94th Cong., 2d Sess. 5
(1976).13

5. Commenting on the obstacles facing minority 
contractors who must obtain commercial financing 
for their projects, Representative Gorman stated:

We must accept the fact that a man’s color has 
been a barrier to his access to credit in this coun­
try during all of our history and, therefore, if 
you have to take different steps for them [minor­
ities] from other kinds of people, you are merely 
living in a real world. * * * I think that we have 
to accept the fact there are fewer black entre­
preneurs in this country than there should be be­
cause of our historic problems of racism in this 
country.

Government Minority Small Business Programs: 
Hearing Before the Subcomm. on Minority Business 
Enterprise of the House Select Comm, on Small 
Business (Vol. 1) 2 (1971).

6. In a similar vein, Representative Hamilton has 
observed that “ [m]any lending institutions are sim­
ply reluctant—often for the wrong reasons-—to extend 
a line of credit to a minority businessman. Others 
have restricted lending policies that demand a credit

13 Minority contractors themselves appear to share Senator 
Kennedy’s perception of the barriers to entry that they must 
surmount in the construction industry. See Civil Rights Com­
mission Report, supra, note 21, at 21-22; General R ev iew  o f 
M ajor S B A  P rogram s and A c tiv itie s :  H earings B efore  the  
Subcom m . on M in o rity  E n terp r ise  and General O versigh t 
o f the H ouse Comm, on Sm all B usiness, 95th Cong., 2d Sess. 
5, 15, 56 (1978).



20a

rating before credit can be made available.’* 124 
Cong. Rec. E985 (daily ed. Mar. 2, 1978).

7. Senator Tower has also acknowledged the need 
for special financing assistance to minority busi­
nesses. In debate on the Small Business Investment 
Act Amendments of 1972, Senator Tower explained 
(118 Cong. Rec. 35378 (1972)):

Our goal is * * * to give the capital push needed 
to get business formations and successes going 
in minority communities, so that they can have 
the chance to become self-sufficient and to de­
velop the capital within the minority communi­
ties to develop their own financing resources in 
the future.

☆  U. S . GOVERNMENT PRINTING OFFICE; 1 9 7 9 3 0 2 8 8 2  1 0 2