448 U.S. 448 (1980)
In May 1977 Congress enacted the Public Works Employment Act of 1977, which amended the Local Public Works Capital Development and Investment Act of 1976 and authorized an additional $4 billion appropriation for federal grants to state and local governmental entities for use in local public works projects.1
The 1977 Act added section 103(f)(2), the minority business enterprise provision, which states that except to the extent the Secretary determines otherwise, no grant shall be made unless the applicant gives satisfactory assurance that at least 10 percent of the amount of each grant shall be expended for minority business enterprises, defined as businesses at least 50 percent owned by minority group members or, in the case of a publicly owned business, at least 51 percent of the stock owned by minority group members, with minority group members defined as citizens who are Negroes, Spanish-speaking, Orientals, Indians, Eskimos, and Aleuts.2
The provision originated as a floor amendment offered in the House by Representative Mitchell on February 23, 1977.3 It was modified during debate to include language allowing the Secretary to determine otherwise and was adopted by the House.4 A similar amendment was introduced by Senator Brooke in the Senate.5 The Conference Committee adopted the House language with the comment that the provision shall be dependent on the availability of minority business enterprises located in the project area.6
Petitioners are several associations of construction contractors and subcontractors and a firm engaged in heating, ventilation, and air conditioning work.7 On November 30, 1977, petitioners filed a complaint in the United States District Court for the Southern District of New York seeking declaratory and injunctive relief to enjoin enforcement of the MBE provision.8 Named as defendants were the Secretary of Commerce, as the program administrator, and the State and City of New York, as actual and potential project grantees.9 Their complaint alleged that they had sustained economic injury due to enforcement of the 10% MBE requirement.10 After a hearing held the day the complaint was filed, the District Court denied a requested temporary restraining order and scheduled the matter for an expedited hearing on the merits.11 On December 19, 1977, the District Court issued a memorandum opinion upholding the validity of the MBE program and denying the injunctive relief sought.12 The United States Court of Appeals for the Second Circuit affirmed, holding that even under the most exacting standard of review the MBE provision passes constitutional muster.13 The Supreme Court granted certiorari to consider a facial constitutional challenge to the requirement.14
Whether the minority business enterprise provision of the Public Works Employment Act of 1977 can be sustained under the Spending Clause or the Commerce Clause?15
No. The MBE provision is not a condition reasonably related to the purpose of the local public works program, which is to provide employment and stimulate the economy through public works projects.18 The provision is designed to benefit minority business enterprises rather than to further the program's purpose.19 It is not a regulation of commerce but a condition attached to federal grants.20
The minority business enterprise provision cannot be sustained under the Spending Clause or the Commerce Clause.21
Whether the minority business enterprise provision violates the equal protection component of the Due Process Clause of the Fifth Amendment?22
No. The governmental interest in remedying the effects of past discrimination is compelling.25 Congress had ample evidence before it that minority business enterprises had been excluded from public contracting because of racial discrimination.26 The MBE provision is narrowly tailored to achieve the governmental interest because it is limited in scope to 10 percent of the federal funds, limited in duration to the 1977 public works program, and provides for waivers where the requirement cannot be met without departing from program objectives.27
The minority business enterprise provision does not violate the equal protection component of the Due Process Clause of the Fifth Amendment.28
Related opinions on this issue
Justice Powell concurred in the judgment and applied the strict scrutiny analysis from his opinion in University of California Regents v. Bakke.29 He concluded that Congress had made findings of past discrimination against minority business enterprises sufficient to establish a compelling governmental interest in eradicating the continuing effects of that discrimination.30 The 10 percent set-aside was a narrowly tailored remedy because it was limited in scope and duration and included waiver provisions to avoid unfair applications.31
It served the compelling interest without imposing an undue burden on innocent nonminority contractors, as the set-aside affected only a small fraction of overall construction spending.32 Powell emphasized that Congress possesses unique authority under the Enforcement Clauses to select reasonable remedies for identified discrimination.33
Joined by Brennan, Blackmun
Justice Marshall concurred in the judgment and emphasized the importance of remedial measures to overcome the effects of past discrimination.34 He concluded that Congress has the power to remedy those effects under its authority to enforce the post-Civil War Amendments.35 The MBE provision is a reasonable exercise of that power because it is designed to ensure minority business enterprises have a fair opportunity to participate in federal public works programs.36
Marshall stressed that racial classifications designed for remedial purposes are not subject to conventional strict scrutiny when they serve important governmental objectives and are substantially related to achievement of those objectives.37 He noted that the set-aside affects only a minuscule amount of construction funds and does not stigmatize any group.38
Joined by Rehnquist
Justice Stewart dissented and concluded that the MBE provision is a racial quota that violates the equal protection guarantees of the Fifth Amendment.39 He stated that the Constitution prohibits the government from distributing benefits and burdens on the basis of race because the equal protection standard absolutely forbids invidious discrimination by government.40 The interest in remedying past discrimination cannot justify a racial quota because the Constitution requires each individual to be treated as an individual, not as a member of a racial group.41
Stewart observed that the provision bars a class of contractors from opportunities solely on the basis of race or ethnic background, which is the kind of law the guarantee of equal protection forbids.42 He would have reversed the judgment of the Court of Appeals.43
Justice Rehnquist joined the dissenting opinion of Justice Stewart and wrote separately to emphasize that the MBE provision is a racial quota that cannot be reconciled with the principle of equal protection under the law.44 He stated that the provision is indistinguishable from the racial quotas that this Court has consistently struck down because it is a fixed percentage set-aside based solely on race.45 Any racial quota violates the principle of equal protection, and the fact that the quota is set at 10 percent rather than some other percentage does not make it constitutional.46
Rehnquist would have reversed the judgment of the District Court.47
Justice Stevens dissented and concluded that the statutory classification lacks a sufficient justification.48 He noted that the Act provides no explanation for the particular racial groups included or for the 10 percent figure.49 There is not one word in the legislative history that identifies the common characteristics that every member of the preferred class was believed to share.50
The classification cannot be defended as a narrowly tailored remedial measure because it benefits firms that were never victims of discrimination, including newly formed firms and those that succeeded without assistance.51 Stevens observed that the provision creates monopoly privileges for a class defined solely by racial characteristics and that grants of privilege on the basis of characteristics acquired at birth are far from an unmixed blessing.52 He would have held the statute unconstitutional on narrower grounds related to the absence of focused legislative findings.53
Whether the minority business enterprise provision violates Title VI of the Civil Rights Act of 1964 or other federal statutes?54
Title VI prohibits discrimination on the ground of race, color, or national origin in any program or activity receiving federal financial assistance, but does not prohibit race-conscious remedial measures.55
No. The MBE provision does not violate Title VI because it is a remedial measure designed to overcome the effects of past discrimination.56 Title VI does not prohibit race-conscious remedial measures.57 The provision also does not violate any other federal statute because it represents a valid exercise of congressional power under the Constitution.58
The minority business enterprise provision does not violate Title VI of the Civil Rights Act of 1964 or other federal statutes.59