United States District Court, D. Montana, Billings Division
DANA L. CHRISTENSEN, Cheif District Judge.
Before the Court are the parties' cross-motions for summary judgment. For the reasons explained, the Court grants Defendant's motion for summary judgment on all claims.
Factual and Procedural Background
Plaintiff Mountain West Holding Company ("Mountain West") brings the following claims against Defendants State of Montana, Montana Department of Transportation, Mike Tooley, Director of the Montana Department of Transportation, Patti McCubbins, MDT's Civil Rights Bureau Chief, and Wendy Stewart, MDT's DBE Program Manager ("Defendants"): Count 1: Violation of the Fourteenth Amendment and 42 U.S.C. § 1983, for which Mountain West seeks declaratory and injunctive relief against the individual Defendants; Count 2: Declaratory Relief under 28 U.S.C. § 2201 against the individual Defendants; Count 3: Violation of Title VI, 42 U.S.C. § 2000d, for which Mountain West seeks monetary damages against the State of Montana and the Montana Department of Transportation; and Count 4: Injunctive Relief against the individual Defendants. Mountain West alleges Defendants' implementation of Montana's Disadvantaged Business Enterprise ("DBE") program violated, and are likely to continue to violate, its constitutional right to Equal Protection under the Fourteenth Amendment.
1. Statutory and Regulatory Background
Pursuant to the current federal highway funding bill, Moving Ahead for Progress in the 21st Century Act ("MAP-21"), states receiving federal funds from the U.S. Department of Transportation ("USDOT") for the planning, design, construction and repair of roads and highways must establish a state-designed and federally-approved DBE program that complies with federal regulations. See 49 C.F.R. § 26.1 et. seq. DBE programs are designed to ensure nondiscrimination in the award and administration of USDOT funded contracts and to create a level playing field for businesses competing for USDOT funded contracts, among other objectives. 49 C.F.R. § 26.1. A state is not eligible to receive USDOT financial assistance unless it is in compliance with federal regulations and USDOT approves its DBE program. Id. at 26.21(c).
A DBE is a small business owned and controlled by socially and economically disadvantaged individuals. MAP-21 §1101(b)(3). States creating DBE programs "must rebuttably presume that citizens of the United States (or lawfully admitted permanent residents) who are women, Black Americans, Hispanic Americans, Native Americans, Asian-Pacific Americans, Subcontinent Asian Americans, or other minorities found to be disadvantaged by the SBA, are socially and economically disadvantaged individuals." 49 C.F.R. § 26.67.
States must establish an "overall goal" for DBE participation in federally assisted contracts. Id. at 26.45(a). To do this, the state must determine the base level of availability of DBE's in its jurisdiction, make any necessary adjustments to the base level, and then arrive at an overall goal for DBE utilization, expressed as a percentage of all Federal-aid highway funds the state will expend in the forthcoming three fiscal years. Id. at 26.45(c)-(e). Overall goals "must provide for participation by all certified DBEs and must not be subdivided into group-specific goals." Id. at 26.45(h). If a state establishes or implements its goals in a way different from that provided in the regulations, then it is ineligible to receive USDOT financial assistance. Id. at 26.45(f)(7).
States must use race-and gender-neutral means to meet their overall goals to the maximum extent possible. Id. at 26.51(a). In order to meet any portion of the overall goal that the state predicts it cannot achieve using race-neutral means, the state must establish "contract goals, " which are contract-specific goals for DBE participation on specific, USDOT-assisted contracts that have subcontracting possibilities. Id. at 26.51(d), (e). Contract goals should be set "so that they will cumulatively result in meeting any portion of [a state's] overall goal [that it] does not project being able to meet through the use of race-neutral means." Id. at 26.51(e)(2). Contract goals "must provide for participation by all certified DBEs and must not be subdivided into group-specific goals." Id. at 26.51(e)(4).
2. Western States Paving Co. v. Washington Dept. of Transportation
In 2005, a divided three-judge panel of the Ninth Circuit decided Western States Paving Co. v. Washington State Department of Transportation. 407 F.3d 983 (9th Cir. 2005). In Western States, the Court held that a state DBE program can be subject to an as-applied constitutional challenge, despite the facial validity of the federal program. 407 F.3d at 997. The Court held that whether a state DBE program "is narrowly tailored to further Congress's remedial objective depends upon the presence or absence of discrimination in the State's transportation contracting industry." Id. at 997-998. The Court further held that "even when discrimination is present within a State, a remedial program is only narrowly tailored if its application is limited to those minority groups that have actually suffered discrimination." Id. at 998.
3. Montana's response to Western States
Prior to Western States, Montana had used race conscious contract goals to meet its annual overall goal for DBE participation. Following Western States, the Montana Department of Transportation ceased using race-conscious means in its award of USDOT-assisted contracts.
Montana DOT also engaged a private firm, the D. Wilson Consulting Group, LLC, to determine whether there was evidence of discrimination in Montana's transportation contracting market. The D. Wilson Consulting Group ("the Group") studied DBE participation in USDOT-assisted contracts in Montana for fiscal years 2000 through 2006.
The Group published the results of its study ("the D. Wilson Disparity Study, " "Disparity Study" or "the study") in 2009. After controlling for a variety of factors, the Group produced an adjusted list of qualified, willing, and able DBEs within the market area for Montana transportation contracts. Based on this adjusted list of DBEs, the Group conducted a disparity analysis by business area to determine the differences between the utilization of DBEs and the availability of such firms within the relevant market area. The results indicated significant underutilization of DBEs in all minority groups in "professional services" contracts, significant underutilization of Asian Pacific Americans and Hispanic Americans in "business ...