9th Circuit issues key affirmative action opinion

Western States Paving Co. v. Washington State Dept. of Transportation resurrects the ghosts of the 1990s jurisprudence - affirmative action programs and decisions like Crosson and Adarand Construction v. Pena.  It is a facial and as-applied challenge to the State of Washington's implimentation of the Transportation Equity Act of the 21 Century ("TSA-21").  TSA-21 aspires that no less than 10% of the federal transportation funds awarded to the States go to a disadvantaged business enterprise.  While racial / ethnic minorities are presumtively disadvantaged under TSA-21, an economically disadvantaged non-minority business may qualify and a wealthy minority-owned business may be disqualified.  Each State implementing the program must engage in a statistical analysis to determine whether there is a need to remedy past discrimination against minorities in the transportation industries.  Essentially, the State must compare the % of the disadvantaged businesses in the state with the % of federal transportation contract funds going to disadvantaged businesses.

As to the facial challenge, the majority (written by Judge O'Scannlain) follows 8th and 10th Circuit and finds TSA-21 to be facially constitutional.  The court finds that the Congress had compelling interest in creating a remedial scheme to overcome effects of past discrimination in the transportation contracting industry. The court further finds that TSA-21 is narrowly tailored to achieve the above-noted compelling interest because it creates no quotas, it is limited in duration (Congress must periodically re-authorize it), and it contains mechanism to lessen burden on non-minority firms (wealthy minorities can be disqualified while economically advantage non-minorities can qualify).

The fireworks, of sorts, begin, with the plaintiff's as-applied challenge.  Reversing the district court, Judges O'Scannlain and Bea find that even if Washington demonstrates compliance with TSA-21 and its implementing regulations, it still must separately meet strict scrutiny to survive an as-applied challenge.  Citing 8th Circuit precedents, the majority finds that while a state in this situation does not have to re-establish a compelling state interest, it still has to show its program is narrowly tailored to achieve that interest by showing that the state itself needs to combat effects of past discrimination within that state.  Majority views the latter step as critical because narrow tailoring is accomplished only when this remedial scheme is applied in regions where it is necessary.

Dissenting judge McKay (from the 10th Circuit, sitting by designation) would limit as-applied challenges to situations where the implemeting state actually exceeds its federal authority under TSA-21 and implementing regulations.

This is a fairly complex opinion, but at first blush, the majority seems to be right on all issues.  In terms of the as-applied challenge, if TSA-21 is a remedial statute designed to combat specific effect of past discrimination, it can achieve its purpose only when used in regions when such discrimination really exists.