In one of her first policy decisions, Transportation Secretary Elizabeth Hanford Dole has threatened to cut off millions of dollars in federal highway and mass transit aid to states that don't take immediate steps to award 10 percent of their contract funds to minority-owned businesses.
Proposed Department of Transportation regulations, if adopted in their current form, would represent the first time that the department has said it will punish states that fail to comply with minority contracting goals.
They would also signal a departure from the Reagan administration's general policy of relaxing hiring and contracting quotas based on gender and race and, instead, relying on negotiated agreements with local governments and businesses.
As a result, the DOT has found itself in the unusual position of being criticized by members of Congress, state governments and lobbying groups for taking a tough stand on a civil rights issue.
"To say they've gone way beyond what is required is the understatement of the year," said John R. Gentille, director of the highway division of the Associated General Contractors of America.
The flap stems from the DOT's interpretation of a last-minute amendment, sponsored by Rep. Parren J. Mitchell (D-Md.) to the 1982 Surface Transportation Assistance Act. The law, which raised the federal gasoline tax by a nickel a gallon, will provide $71 billion over the next four years for mass transit and to repair the nation's highways.
Mitchell's amendment specified that, unless the secretary of transportation determines otherwise, at least 10 percent of the funds provided under the act shall be awarded to "small business concerns owned and controlled by socially and economically disadvantaged individuals."
That language went well beyond the department's existing policy of simply requiring states to make a good faith effort to meet non-binding goals negotiated with the DOT. And, under Dole's direction, the DOT has issued one of the strictest possible interpretations of the amendment.
In its proposal, the DOT has said each state must meet the 10 percent figure or face the loss of its funding for highways and mass transit. If a governor requests a waiver, the DOT can grant one. But it has said that when it considers whether to grant such a waiver the size of a state's minority population will be "of limited significance."
In addition, "difficulties caused by state or local law," such as requirements for contractor bonding or for acceptance of the lowest bid, will not be considered grounds for a waiver, the department said in proposing its rules. Morever, the DOT has served notice that it will not provide a transition period beyond the current fiscal year.
"Certainly, there's a change in policy, but it's related to the new statute," said Robert C. Asbhy, a staff attorney in the DOT general counsel's office who drafted the regulations. "We would not have proposed this in the absence of the Mitchell amendment ."
Ashby dismissed most of the criticism as coming from groups that have been strongly opposed to minority set-asides in any form. The proposed regulations are not "fixed in concrete," he said, adding that they may be relaxed before final regulations are published next month.
But Dole has expressed a strong interest--both within the department and before congressional committees--in strictly enforcing the Mitchell amendment. "She was definitely involved" in drawing up the regulations, Ashby said. "We're not talking about something that was laying around from the Drew Lewis days and just popped up on her desk and she signed it."
The proposal, though, has been criticized by Rep. James J. Howard (D-N.J.), chairman of the House Public Works and Transportation Committee, which drafted the legislation.
In a letter co-signed by three other committee members, Howard told Dole that the proposed regulations appear "to have less flexibility than we intended" and, by provoking delays and controversy, could jeopardize one of the primary purposes of the law--to revitalize the economy by creating jobs.
In an effort to dramatize their complaints, critics have pointed to states such as South Dakota, which would have to increase its minority contract awards from $86,000 to $7.5 million next year in order to meet the 10 percent requirement. In addition, the critics note that the regulations could pose particular problems for local transit authorities because the only major domestic supplier of buses is the General Motors Corp.
"Some states will not find it remotely possible to achieve anything like the 10 percent requirement ," said Francis B. Francois, executive director of the American Association of State Highway and Transportation Officials.
Some critics also have charged that the DOT is trying to put the governors, most of them Democrats, in a difficult position politically by requiring them to sign the waiver requests, rather than giving that responsibility to state highway boards, some of which are independent.
"The governors usually aren't in that line of fire," one lobbyist said. "DOT is putting them there."
Ashby said the DOT wants the governors to sign the requests because it doesn't want to referee disputes between governors and their highway commissions. "It is political in a sense," he acknowledged. But he insisted that the DOT will give a reasonable hearing "to the South Dakotas of the world."
In the meantime, though, the proposed regulations are winning the department some praise from the minority business community, which now has visions of getting up to $7 billion in new federal contracts over the next four years. "I must say I'm very, very pleased with the attitude shown by DOT on this issue," Mitchell said.