Member Article

As we discussed in prior updates, on July 13, 2022, Christian Bruckner filed a lawsuit in the federal district court in Tampa, Florida, seeking to enjoin the Infrastructure Investment and Jobs Act’s set-aside of 10% (around $37 billion) of transportation funding for “small business concerns” owned and controlled by “socially and economically disadvantaged individuals.” On July 26, Bruckner filed a motion for preliminary injunction, seeking an “injunction prohibiting Defendants from implementing the race and gender quota in Section 11101(e)(3) of the Infrastructure Investment and Jobs Act.” The federal government opposed Bruckner’s motion and filed its own motion to dismiss Bruckner’s claims.

The court has not yet issued a decision on Bruckner’s motion for a preliminary injunction or the federal government’s motion to dismiss. A hearing on Bruckner’s motion for a preliminary injunction was held on November 7th, and on November 21st, the federal district court requested that the parties submit supplemental briefing describing the “administrative and implementation of the DBE program,” referring to the Department of Transportation’s (DOT) Disadvantaged Business Enterprise (DBE) program. The federal district court also ordered (1) Bruckner to clarify whether its complaint challenges the federal DBE program “as it applies to direct contracting with the federal government,” and (2) the federal government to “certify[ ] whether there are localities or federal agencies receiving funding from the Infrastructure Act that have set a DBE goal of 0%.”

The DOT’s DBE program has been authorized by Congress at various times since 1987, including in the Infrastructure Investment and Jobs Act. Section 11101(e)(3) of the Infrastructure Investment and Jobs Act also provides that:

Except to the extent that the Secretary determines otherwise, not less than 10 percent of the amounts made available for any program under this division (other than section 14004), division C, and section 403 of title 23, United States Code, shall be expended through small business concerns owned and controlled by socially and economically disadvantaged individuals.

Section 11101(e)(2)(A) of the Infrastructure Investment and Jobs Act defines a “small business concern” as “a small business concern (as the term is used in section 3 of the Small Business Act (15 U.S.C. 632)),” but excludes entities (or a group of entities controlled by the same socially and economically disadvantaged person) that “have average annual gross receipts during the preceding 3 fiscal years in excess of $26,290,000, as adjusted annually by the Secretary for inflation.” Section 11101(e)(2)(B) of the Infrastructure Investment and Jobs Act also defines “socially and economically disadvantaged individuals” for purposes of the 10% set-aside in Section 11101(e)(3) as including both those individuals falling within the definition of that term “in section 8(d) of the Small Business Act (15 U.S.C. 637(d))” and women. Accordingly, Section 11103 sets aside 10% of the infrastructure projects funding appropriated under the Infrastructure Investment and Jobs Act for contracts going to federal contractors owned and controlled by women or socially and economically disadvantaged individuals.

Bruckner’s lawsuit and motion for a preliminary injunction claims this 10% set-aside is racially discriminatory and unconstitutional. Bruckner argues that the set-aside does not pass strict scrutiny under tests adopted by the U.S. Supreme Court to address statutes or regulations that discriminates in favor of a race.

In response, the federal government raises a variety of arguments, but a primary one is that the DOT’s DBE program does not actually mandate that 10% of federal contracting dollars be set aside for federal contractors owned and controlled by women or socially and economically disadvantaged individuals, but instead uses 10% as an aspirational goal. While the Infrastructure Investment and Jobs Act states that “not less than 10 percent of the amounts made available for any program under this division . . . shall be expended through small business concerns owned and controlled by socially and economically disadvantaged individuals” (emphasis added), it also prefaces that directive with the phrase “[e]xcept to the extent that the Secretary determines otherwise.”

 As such, the federal government argues the Secretary (of the DOT) has, or will, determine that the 10% set-aside is not mandatory but an aspirational goal, and therefore does not implicate constitutional racial discrimination concerns.

Given these arguments, it appears the federal district court hearing Bruckner’s lawsuit and motion for preliminary injunction is interested in determining both if Bruckner is challenging the DBE program as a whole, or just its application in specific cases and the extent to which programs funded by the DOT are using the 10% as a goal, a mandate, or something else.

Bruckner and the federal government have until December 2nd to file responses to the federal district court’s order.

This article summarizes aspects of the law and does not constitute legal advice. For legal advice for your situation, you should contact an attorney.

 

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