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California: Judge Upholds Racial Quotas for Highway Contracts
Federal judge approves set asides and racial quotas for transportation contracts in California.

Highway construction
A federal judge last week granted the California Department of Transportation (Caltrans) the right to discriminate against white business owners and men when awarding contracts. The Pacific Legal Foundation had filed suit against the department on behalf of the Associated General Contractors (AGC) of San Diego, insisting that its racial quota program violated the voter-approved Proposition 209 prohibition on race- and sex-based preferences in public contracting, employment and education. US District Court Judge John Mendez weighed the arguments, denied the Pacific Legal Foundation's motion and granted summary judgment in favor of Caltrans.

"This decision affirms that Caltrans' efforts to level the playing field are constitutionally sound and will ensure that billions of dollars in federal transportation funds continue flowing to California," Caltrans Director Cindy McKim said in a statement Wednesday. "We will continue to reach out to disadvantaged businesses and hope our program serves as a model for other states to follow."

In March 2009, Caltrans announced it would implement a "mandatory race conscious Disadvantaged Business Enterprise (DBE) Program" that set aside 6.75 percent of federal-aid project contracts for blacks, Asians and Indians -- but not Hispanics or "subcontinent Asian males." AGC member companies -- the San Diego chapter represents 1300 firms -- complained that under the program, they lost out on business despite offering higher quality services at better prices. A similar program had been struck down as illegal in 2006, but Caltrans officials worked with the Obama administration looking for a way around the law. The US Department of Transportation issued a letter stating that California would lose federal highway funds if it did not implement a quota system. This triggered an escape clause in Proposition 209 that allows discrimination to avoid losing federal money.

Caltrans argued it was remedying discrimination against minorities and women with the DBE program because these groups only received three percent of the contracts under race-neutral policies. The Pacific Legal Foundation was outraged by the decision and is considering an appeal.

"What makes the judge's decision particularly disappointing is that briefing had only been completed seven days before the date set for oral argument, making it unlikely that the court thoroughly examined the complete record under the exacting requirements of strict scrutiny -- which is the court's duty in such cases," the foundation explained.

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