Hard choices about city's MBE program

Ruling: A federal judge recently knocked down Baltimore's Minority Business Enterprise program. Legal alternatives are available.

March 05, 2000|By George R. La Noue

ON DEC. 17, Federal District Judge Andre M. Davis, an African-American and a Clinton appointee, ruled that the decade-old Baltimore Minority Business Enterprise (MBE) program was illegal. After a terse order, he promised to write his final opinion shortly, but he also ruled that discovery could stay open for another six months. This suggested that his mind was not closed to new evidence and that the injunction could be revised.

The hammer came down eight weeks later. On Feb. 16, the judge ruled again, ending the speculation about waiting for new evidence, and closed down the MBE program permanently. Baltimore, he found, had no evidence in hand to support the constitutionality of its program. Now the city faces some difficult choices.

The Baltimore MBE program began in 1986 but was revised purportedly to meet federal constitutional standards in 1990. Throughout the 90s, the program required that 20 percent of all city contracting dollars be awarded to minority-owned firms and three percent to women-owned firms. Minorities were defined as African-Americans, Hispanics, Asian-Americans and Native Americans, though the city has fought quixotic battles in the past to keep a person from Sudan from being classified as an African-American and a person from Iran from being classified as an Asian-American.

In 1989, the Supreme Court in City of Richmond vs. Croson changed the constitutional rules about MBE programs. The court ruled that the legal test of strict scrutiny applied. Unless a government had identified a form of discrimination that created a compelling interest to use racial classifications as a remedy, and the use of those remedies was narrowly tailored to do the least damage to innocent parties, MBE programs violated the equal protection clause of the Fourteenth Amendment.

Since then, every local MBE program that has been subject to full legal proceedings has been found unconstitutional (in Philadelphia; Columbus; Houston; Jackson, Miss.; San Diego; Cuyahoga County, Ohio; Dade County, Fla.; Fulton County, Ga.; DeKalb County, Ga.; and state programs in California, Florida, New Jersey and Ohio.)

Dividing public contracts into racial shares may be good politics. It is not good law.

The strict scrutiny test is difficult to meet. The Fourth Circuit Court of Appeals, which holds jurisdiction over the laws of Maryland and neighboring states, has struck down race-based scholarships at the University of Maryland, College Park, race-based school admissions in Montgomery County and Alexandria, Va. race-based voting districts in North Carolina and various affirmative action plans for police and fire officials, as well as the Richmond MBE program.

When the citys lawyers first read the Croson case, they decided to do what most cities did that wanted to defend their MBE programs. They funded a study to gather evidence to identify the discrimination that the program was supposed to remedy. A team from the University of Maryland Law School was selected and made special associate city solicitors to acquire the statistical and anecdotal evidence. That evidence turned out to be weak. There had been previous reports by federal agencies complaining that minority communities were not receiving enough of the financial benefits of the federal largess being pumped into the city.

But these reports did not make any finding of discrimination. When the legal team began to examine statistics about the availability and utilization of MBEs in past years, the data were highly incomplete. Anecdotes about discrimination have never proven sufficient under the strict scrutiny test.

The legal team nevertheless took the cup is half full approach. It announced that the city program was constitutional but recommended a series of major program changes to make it more narrowly tailored. Then-Mayor Kurt L. Schmoke applauded the teams favorable conclusion about the MBE program, but the changes were never made. The program became a routine bureaucratic requirement. Annual reports were never issued, and no evaluations were made.

Now the MBE programs future is in the hands of Mayor Martin OMalley, who surely is aware of its symbolic, if not practical, implications for the citys racial politics and economic future. Even before Judge Davis second ruling, the city announced an appeal to the Fourth Circuit. The mayor said, In our city, the minority is the majority. We will promote minority business development by every means at our disposal, and we will win.

The mayor went further and made a statement about the west side development plan that might figure prominently in the plaintiffs future arguments, saying, If you are going to seek a [city development] tax break, you sure as heck better bring significant minority participation. This is how we are going to evaluate things.

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