U.S. Department of Transportation (USDOT) regulations require that any state receiving federal highway funds must have a federally-approved Disadvantaged Business Enterprise (DBE) Program. DBE programs are purportedly designed to ensure non-discrimination in public contracting and to promote the use of DBEs in federally assisted contracts. A DBE is a small business “owned and controlled by socially and economically disadvantaged individuals.” State DBE programs “must rebuttably presume that citizens of the [USA] (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.” States must establish an “overall goal” for DBE participation in federally assisted contracts. The overall goal is based on the availability of “ready, willing and able to participate” DBEs compared to all businesses ready, willing, and able to complete contracts. After determining a “base level” of eligible DBEs, the state must determine what percentage of all Federal-aid highway funds the state receives will go to DBEs in the forthcoming three fiscal years. Overall goals “must provide for participation by all certified DBEs and must not be subdivided into group-specific goals.” If a state establishes or implements its goals in a way different from that provided in the regulations, it is ineligible to receive USDOT funds.
In 2012, Mountain West Holding Company, a Montana firm that does construction specific traffic planning for projects submitted the low bid on three separate contracts; all three were rejected because of the owner’s race given Montana’s 5.83% racial quota. In response to an equal protection challenge filed by the Montana company, a Montana federal district court upheld the program’s constitutionality in November of 2014. Mountain West timely appealed to the U.S. Court of Appeals for the Ninth Circuit. On May 4, 2015, Mountain West filed its opening brief. On May 8, 2015, MSLF filed an amicus curiae brief in support of Mountain West. On June 8, 2015 the Montana Department of Transportation (DOT) filed its opening brief and a motion to dismiss. On July 7, 2015, Mountain West filed its reply brief and response to Montana DOT’s motion to dismiss. On July 31, 2015, the Montana DOT filed its reply in support of its motion to dismiss brief. Oral argument was held on March 10, 2017. On May 16, 2017, citing to MSLF’s victory in Adarand, the Ninth Circuit panel held that summary judgment in favor of Montana was improper in light of factual disputes regarding the so-called expert report and because the evidence relied on by the federal district court, specifically a decrease in the number of minority business and anecdotal evidence regarding a “good old boy’s network,” failed to prove a history of discrimination.