US SUPREME COURT DECISIONS

OCTOBER TERM, 1999

Syllabus

ADARAND CONSTRUCTORS, INC. v. SLATER, SECRETARY OF TRANSPORTATION, ET AL.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

No. 99-295. Decided January 12,2000

The Department of Transportation (DOT) favors contracting with companies that employ so-called "disadvantaged business enterprises" that are certified by, inter alios, a state highway agency as owned and controlled by socially and economically disadvantaged individuals. Federal regulations require that the certifying entity presume members of specified minority groups to be socially disadvantaged and allow others to be certified if they can demonstrate social disadvantage. Both third parties and DOT may challenge such findings. Petitioner, whose principal is a white man, submitted the low bid on a portion of a federal highway project, but the prime contractor awarded the subcontract to a company certified by the Colorado Department of Transportation (CDOT) as a disadvantaged enterprise. Petitioner sued various federal officials, alleging that a Subcontractor Compensation Clause required by the Federal Government-which clause rewards prime contractors for subcontracting with enterprises certified as disadvantaged by a State's highway or transportation department-and in particular the racebased presumption that forms its foundation, violated petitioner's Fifth Amendment equal protection right. Ultimately, under Adarand Constructors, Inc. v. Pena, 515 U. S. 200, the District Court held that the clause and the presumption failed strict scrutiny because they were not narrowly tailored. Adarand Constructors, Inc. v. Pena, 965 F. Supp. 1556 (Adarand II). While respondents' appeal was pending, petitioner filed a second suit in District Court challenging (on the same grounds) the State's use of the federal certification guidelines. Shortly thereafter the State altered its certification program, substituting for the social disadvantage presumption a requirement that all applicants certify on their own account that each of the firm's minority owners has experienced social disadvantage based on the effects of racial, ethnic, or gender discrimination. Taking judicial notice of its holding in Adarand II that the Federal Government had discriminated against petitioner's owner by applying unconstitutional rules and regulations, the District Court reasoned that petitioner likely was eligible for disadvantaged business status under Colorado's system. Petitioner then requested and received that status from CDOT. Upon learning that CDOT had given petitioner disadvantaged business status, the Tenth Circuit held

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that the cause of action was moot and vacated the District Court's Adarand II judgment.

Held: Petitioner's cause of action is not moot because, under the circumstances of this case, it is impossible to conclude that respondents have borne their burden of establishing that the challenged conduct could not reasonably be expected to recur. Friends of Earth, Inc. v. Laidlaw Environmental Services (TOG), Inc., ante, at 189. If this case is moot, it is because the Federal Government has accepted CDOT's certification of petitioner as a disadvantaged business enterprise, and has thereby ceased its offending conduct. But DOT accepts only valid certifications from state agencies, and it has yet to approve-as it must-CDOT's procedure. Because there are material differences (not to say incompatibility) between that procedure and DOT's regulations, it is not at all clear that CDOT's certification is valid, and hence not at all clear that the Subcontractor Compensation Clause requires its acceptance. It is also far from clear that there will be no third-party or DOT challenge to petitioner's certification. Indeed, such challenges seem quite probable now that the Tenth Circuit, by vacating Adarand II, has eliminated the sole basis for petitioner's certification in the first place.

Certiorari granted; 169 F.3d 1292, reversed and remanded.

PER CURIAM.

I

Congress has adopted a policy that favors contracting with small businesses owned and controlled by the socially and economically disadvantaged. See § 8(d)(1) of the Small Business Act, as added by § 7 of Pub. L. 87-305, 75 Stat. 667, and as amended, 15 U. S. C. § 637(d)(1) (1994 ed., Supp. IV). To effectuate that policy, the Intermodal Surface Transportation Efficiency Act of 1991 (ISTEA), Pub. L. 102-240, § 1003(b), 105 Stat. 1919, which is an appropriations measure for the Department of Transportation (DOT), seeks to direct 10 percent of the contracting funds expended on projects funded in whole or in part by the appropriated funds to transportation projects employing so-called disadvantaged business enterprises.1 ISTEA § 1003(b)(1).

1 Congress recently enacted the Transportation Equity Act for the 21st Century, Pub. L. 105-178, Tit. I, § 1101(b), 112 Stat. 113, the successor appropriations measure to ISTEA. Although the new Act contains simi-

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