30 F. Supp. 3d 25
D.D.C.2014Background
- OFCCP issued a Final Rule (78 Fed. Reg. 58,682 (Sept. 24, 2013)) implementing Section 503 of the Rehabilitation Act, requiring federal contractors to take affirmative action to employ and advance qualified individuals with disabilities; the Rule became effective March 24, 2014.
- The Rule’s three principal requirements: (1) invite applicants (pre-offer) to voluntarily self-identify as having a disability; (2) collect and analyze applicant and hiring data (applicants, hires, openings, and disability status); and (3) adopt a 7% utilization goal (7% of workforce or 7% in each job group) as a benchmark and perform annual utilization analyses and corrective action where needed.
- Associated Builders and Contractors (ABC), a construction-industry trade association, sued to enjoin portions of the Rule, claiming it exceeds OFCCP authority under Section 503, is arbitrary and capricious under the APA, and violates the Regulatory Flexibility Act; cross-motions for summary judgment were filed.
- The court found ABC had organizational standing (Hunt test and Article III) because the utilization goal imposes concrete compliance burdens (annual analysis) and associated costs estimated industry-wide by OFCCP.
- On the merits the court applied Chevron deference: concluded Section 503 delegates broad authority to define how contractors must “take affirmative action,” and the Rule’s data-collection, analysis, and utilization-goal tools are within OFCCP’s permissible construction.
- The court rejected ABC’s challenges that the Rule conflicts with the ADA, that OFCCP failed to justify changes or to account for construction-industry uniqueness, that the 7% figure was arbitrary, and that OFCCP improperly certified under the Regulatory Flexibility Act; thus the court denied plaintiff’s motion and granted defendants’ cross-motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority under Section 503 to define "take affirmative action" | Section 503 allows a contract provision requiring affirmative action but does not authorize OFCCP to define its content (no power to impose data/metrics) | Section 503 delegates broad rulemaking authority to implement affirmative action, including defining tools like data collection, analysis, and benchmarks | Court: Section 503 unambiguously delegates authority; OFCCP permissibly defined affirmative-action obligations (Chevron Step One/Two) |
| ADA conflict with pre-offer data collection | Inviting applicants about disability status violates ADA prohibitions on disability inquiries | The Rule invites voluntary self-identification; ADA permits voluntary disclosure for Section 503 affirmative-action purposes and EEOC guidance supports this | Court: Data collection is voluntary and consistent with ADA legislative history and EEOC view; no conflict |
| Arbitrary and capricious: utilization goal, industry fit, and 7% figure | OFCCP reversed prior practice without sufficient reason, failed to justify applying goal to construction (transitory workforce), and 7% is arbitrary/unsupported | OFCCP provided reasoned explanation: poor employment outcomes for people with disabilities, lack of data, comparability to other affirmative-action programs, construction already subject to similar EO-based requirements, and a reasonable estimation method using ACS data | Court: Rule is not arbitrary or capricious; OFCCP considered relevant factors, justified change, reasonably rejected construction exemption, and 7% is within a zone of reasonableness |
| Regulatory Flexibility Act (impact on small entities) | OFCCP underestimated costs by assuming existing systems and therefore improperly certified no significant economic impact on a substantial number of small entities | OFCCP reasonably estimated costs, relied on existing compliance systems (EO 11246 parallels), and made defensible predictive judgments | Court: OFCCP’s certification was reasonable and complied with the RFA standard |
Key Cases Cited
- Chevron, U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (establishes two-step deference framework for agency statutory interpretation)
- Hunt v. Washington State Apple Advertising Comm’n, 432 U.S. 333 (tests for organizational standing)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (Article III standing requirements)
- Motor Vehicle Manufacturers Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (agency must supply reasoned analysis; arbitrary-and-capricious standard)
- National Cable & Telecommunications Ass’n v. Brand X Internet Servs., 545 U.S. 967 (agency interpretations of ambiguous statutes entitled to deference even if different from prior judicial reading)
- FCC v. Fox Television Stations, 556 U.S. 502 (requirements for reasoned explanation when agency changes policy)
- WorldCom, Inc. v. FCC, 238 F.3d 449 (agencies need not attain pinpoint precision; numbers must fall within a zone of reasonableness)