[Congressional Record Volume 144, Number 21 (Thursday, March 5, 1998)]
[Senate]
[Pages S1395-S1434]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        INTERMODAL SURFACE TRANSPORTATION EFFICIENCY ACT OF 1997

  The Senate continued with the consideration of the bill.
  Mr. McCONNELL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kentucky.


                Amendment No. 1708 to Amendment No. 1676

(Purpose: To require that Federal surface transportation funds be used 
to encourage development and outreach to emerging business enterprises, 
    including those owned by minorities and women, and to prohibit 
    discrimination and preferential treatment based on face, color, 
    national origin, or sex, with respect to use of those funds, in 
  compliance with the equal protection provisions of the 5th and 14th 
                    amendments to the Constitution)

  Mr. McCONNELL. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Kentucky [Mr. McConnell] for himself, Mr. 
     Gorton, Mr. Sessions, Mr. Hutchinson, Mr. Ashcroft, Mr. 
     Helms, and Mr. Smith of New Hampshire, proposes an amendment 
     numbered 1708.

  Mr. McCONNELL. Mr. President, I ask unanimous consent that reading of 
the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')


                         Privilege of the Floor

  Mr. McCONNELL. Further, Mr. President, I ask unanimous consent that 
Melissa Laurenza, an intern on my staff, be granted floor privileges 
during the consideration of the amendment that is pending at the desk.

[[Page S1396]]

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCONNELL. Mr. President, I rise today to introduce my amendment 
to bring the federal highway program into compliance with the 
Constitution and with the recent landmark case of Adarand versus Pena.
  According to the Congressional Research Service, the federal 
government currently runs approximately 160 preference programs that 
hand out jobs and contracts based on race and gender. Congress now has 
an historic opportunity to take a small step toward equal protection 
for all citizens by ending one of these 160 preference programs.
  As the Senate seeks to put a new transportation bill into play, we 
must allow the costly and divisive ISTEA quota to go into retirement.
  ISTEA mandates that ``not less than 10 percent'' of federal highway 
and transit funds be allocated to ``disadvantaged business 
enterprises'' (``DBEs''). Firms owned by officially designated minority 
groups are presumed to be ``disadvantaged.'' The government has placed 
the stamp of ``disadvantage'' on groups with origins ranging from Tonga 
to Micronesia to the Maldive Islands.
  And, Mr. President, what is the reward for these government-preferred 
firms? The reward is a $17.3 billion quota. In other words, if the 
government decides that you are the preferred race and gender, then you 
are able to compete for $17.3 billion of taxpayer-funded highway 
contracts. But, if you are the wrong race and gender, then--too bad--
you can't compete for that $17 billion pot.
  Frankly, I am astonished that any Member of this Senate would ever 
think such a provision is fair, prudent, or constitutional. In fact, 
the courts have clearly decided that this $17 billion quota is neither 
fair nor constitutional.


                      respect for the constitution

  First of all, Mr. President, the Constitution requires that we end 
this race-based quota. ISTEA's racial presumption was specifically 
addressed in the recent landmark case of Adarand versus Pena, where the 
Supreme Court found that the presumptions subjected individuals to 
unequal treatment under the law. The Court ruled that the presumption 
was unconstitutional--unless the government could establish that the 
race-based program was narrowly tailored to meet a compelling 
governmental interest.
  Let me repeat. That is the test, Mr. President, narrowly tailored to 
meet a compelling Government interest.
  The court held--and it is illustrated here on this chart, straight 
from the opinion, that: ``. . . Section 1003b of ISTEA . . . and . . . 
the regulations promulgated thereunder . . . are unconstitutional.''

  The court specifically ruled on this program--yet somehow it is still 
in the bill--that it is unconstitutional.
  Mr. President, I don't need to remind everybody that when we first 
came to the Senate, we took an oath right down here at the front of the 
room. And we said, ``I do solemnly swear that I will support and defend 
the Constitution of the United States.''
  So, Mr. President, on the one hand we have a Supreme Court decision 
striking down this set-aside in the highway bill and, on the other 
hand, we have the oath that we took to uphold the Constitution.
  Mr. BAUCUS. Mr. President, will the Senator yield for a point of 
clarification?
  Mr. McCONNELL. Let me finish my statement.
  Mr. BAUCUS. Just so that the people watching know what the facts are 
here, I was going to ask the Senator, is that quote on that chart the 
Supreme Court statement, or is that not the Supreme Court statement--
that quote?
  Mr. McCONNELL. It is a decision of a district court. But it is a 
finding of the district court, upon remand of the Supreme Court 
declaring that very standard unconstitutional, and sent it back down to 
the district court which said we looked at it based upon the Supreme 
Court decision and we found it unconstitutional.
  Mr. BAUCUS. That is not the words of the Supreme Court.
  Mr. McCONNELL. I thank my friend from Montana and look forward to 
debating him on this important issue over the next 8 hours and 45 
minutes.
  First of all, Mr. President, the Constitution requires that we end 
this race-based quota.
  ISTEA's race presumption was specifically addressed in the case I 
just referred to where the Supreme Court found that the presumptions 
subjected individuals to unequal treatment under the law. The Court 
ruled that the presumption was unconstitutional unless the Government, 
as I said, could establish that the race-based program was narrowly 
tailored to meet a compelling Government interest. That is the test.
  This past summer, the district court in Colorado, as I just indicated 
to my good friend from Montana, followed the Supreme Court's lead and 
found that the Government, in fact, could not meet the Supreme Court's 
test.
  Specifically, the district court ruled, as in the chart that I 
referred to--and if I said the Supreme Court, I stand corrected--the 
district court ruled, as I just referred to the chart, section 1003(b) 
of ISTEA and the regulations promulgated thereunder are 
unconstitutional.
  The court went on to declare that the Government was precluded from 
the use of percentage goals found in and promulgated pursuant to ISTEA.
  It could not be more clear that the Supreme Court set up the 
standard, sent it back down to the district court, they applied the 
standard, and found this provision unconstitutional.
  It is now incumbent upon the legislative branch to bring ISTEA into 
compliance with Adarand and the Constitution. That is precisely what my 
amendment does, plain and simple. It prohibits the highway program from 
engaging in discrimination or preferential treatment based on skin 
color and gender.
  In fact, as I indicated earlier, we all remember how we began our 
careers here by swearing to uphold the Constitution. Here is a clear 
example of a legislative provision that has been litigated, been found 
unconstitutional, and, surprisingly enough, is still being proposed to 
continue as part of the law of the land.

  So we have, on the one hand, the courts telling us loud and clear 
that ISTEA's racial preferences are unconstitutional and, on the other 
hand, our own public oath to uphold, support, and defend the 
Constitution. We have little choice but to comply with the unambiguous, 
unequivocal mandate of the courts and end this unconstitutional race-
based program.
  Every time the Government hands out a highway contract to one person 
based on race or gender, it discriminates against another person based 
on race or gender. Michael Cornelius recently spoke poignantly to this 
point before the Constitution Subcommittee over in the House of 
Representatives. He explained that his firm was denied a Government 
contract under ISTEA, even though his bid was $3 million lower than the 
nearest competitor--$3 million lower. Mr. Cornelius' bid was rejected 
because the Government felt that the bid did not use enough minority- 
or women-owned subcontractors.
  If you think that ISTEA's quota is only a goal, just ask Michael 
Cornelius. The Cornelius bid proposed to commit 26.5 percent of the 
work to firms owned by minorities and women. Yet 26.5 percent was not 
enough, in the world of so-called ``goals and timetables.'' These goals 
and timetables are more appropriately called quotas and set-asides. You 
see, the combined Federal, State, and local goal under ISTEA was 29 
percent, and Mr. Cornelius' 26.5 percent did not perfectly match the 
Government's so-called goal, and thus the Government awarded the 
contract to the highest bidder--the highest bidder, Mr. President.
  Do you know how much the winning bidder proposed to contract to 
minority firms? I'll bet you can guess. I'll tell you how much work the 
winning bid promised to funnel to preferred firms--29 percent. Surely 
that is a coincidence, that the winning firm met the so-called goal 
exactly, right on the point. But, you know, the average person would 
hear this story and conclude that 29 percent is not merely a goal. The 
average person would conclude that this so-called goal is really a 
quota, and that is, in fact, precisely what it is. It is a race-based 
quota and it is unfair, unconstitutional and, frankly, just plain un-
American.

[[Page S1397]]

  So here we have the Government committing racial and gender 
discrimination and paying $3 million extra just to do it. Let me 
repeat. We have the Government committing racial and gender 
discrimination and paying $3 million extra just to do it. The message 
to Mr. Cornelius, his wife, his children and his employees, over 80 
percent of whom are women and minorities, is: Sorry about the 
discrimination against all of you, but the Federal Government requires 
it. The Federal Government requires the discrimination. Mr. Cornelius 
has publicly challenged Congress to give contracts to the lowest bidder 
and spend the excess millions of dollars in ways that will actually 
help low-income minorities, and that is exactly what my amendment 
proposes.
  This story of unfairness and discrimination is only one of the many, 
many stories that result from the unconstitutional ISTEA quota mandate. 
It is important to remember, as we debate this amendment, that 
discrimination by any other name is still discrimination and it strikes 
at the very core of the person being discriminated against.
  Next, respect for our States and our cities compels Congress to end 
the ISTEA quota. More and more States are being forced to choose 
between court decisions, on the one hand, that order the termination of 
preference programs, and, on the other hand, Federal Department of 
Transportation officials who order them to promote preference programs 
as a condition for receiving Federal aid. So here we have it, a 
situation in which a State or a city is caught between a court decision 
saying you cannot do this anymore and a Federal Department of 
Transportation saying you must do it or you cannot have any money. The 
administration would have the American people believe that Adarand is 
only one decision by one court. It is much more than that. It is a 
landmark Supreme Court decision and is now the law of the land. 
Moreover, it is part of a widespread series of recent court orders 
striking down preferences.
  According to the Congressional Research Service, the Adarand decision 
``largely conforms to a pattern of Federal rulings which have 
invalidated State and local government programs to promote minority 
contracting in Richmond, San Francisco, San Diego, Dade County, FL, 
Atlanta, New Orleans, Columbus, OH, Louisiana, and Michigan, among 
others.'' And new challenges continue to be filed. Congress must act 
now to allow cities and States to get out of this constitutional 
crossfire that they are caught between: On the one hand, courts saying 
you cannot operate that way anymore and, on the other hand, the Federal 
Department of Transportation saying you must operate that way.
  I pointed out in some detail the very real human and societal costs 
of ISTEA's racial preferences. Let me also point out that ISTEA has 
serious financial costs for our country. Every time the Government 
ignores the lowest bidder and pays more for a highway contract based on 
race, it costs the taxpayers real and substantial dollars. As I pointed 
out in Mr. Cornelius' case, the cost was $3 million. But there is a 
global cost as well. Based on a 1994 study by the General Accounting 
Office, ISTEA's racial preferences over the next 6 years will cost the 
Nation $1.1 billion in unnecessary construction costs. And that doesn't 
even include the administrative costs of running the program, 
certifying firms as officially preferred every single year, and then 
running an elaborate enforcement scheme to ensure that everybody meets 
the racial quotas on every transportation contract.

  Also, that $1 billion does not include litigation costs. As I pointed 
out, racial contracting programs are being struck down all across the 
country and more cases continue to be filed. State governments and the 
Federal Government are being forced to spend countless dollars 
defending plainly unconstitutional race-based quotas. So, let me 
reiterate. We are authorizing a bill that not only requires 
discrimination, it wastes over $1 billion of taxpayer money by ignoring 
low bidders and funneling contracts to persons who are of the 
officially approved race and gender.
  The Federal Government ought to take the lead in ensuring that all 
citizens are given opportunities without regard to race, color, 
national origin, or gender. In that spirit of equality and 
entrepreneurship, my amendment displaces the race-based Disadvantaged 
Business Enterprise Program with a race-neutral Emerging Business 
Enterprise Program. So let me make sure everybody understands. My 
amendment replaces the race-based Disadvantaged Business Enterprise 
Program with a race-neutral Emerging Business Enterprise Program.
  My amendment requires every State that receives Federal highway 
dollars to take concrete and specific action to enable emerging 
businesses to compete for highway contracts and subcontracts. For 
example, States will be required to maintain a directory of emerging 
business enterprises and specifically provide outreach and recruiting 
for highway contracts. The bill also requires targeted outreach and 
recruiting of emerging businesses owned by women and minorities. 
Finally, States will be required to provide technical services and 
assistance on critical issues such as bonding, lending, and general 
business management, including estimating and bidding practices.
  This amendment requires a major outreach effort to make sure that 
people understand how to compete for business. The emerging business 
enterprise amendment offers genuine opportunity for substantive 
business development of all emerging businesses, regardless of race or 
gender. The emerging business enterprise program will allow small 
businesses to learn how to compete instead of simply developing a 
destructive dependence on bid preferences.
  One example of the destructive tendency of preferences comes from a 
very thoughtful book entitled, ``The Affirmative Action Fraud.'' In 
that book, Clint Bolick explains that the Rocky Mountain News recently 
tracked 100 companies that received contracts in 1985 under the city of 
Denver's racial preference program. Denver's minority contracting 
program required that a certain percentage of all contracts had to be 
funneled to minority-owned firms. Ten years later--that was in 1985--10 
years later, 42 minority firms had gone out of business, 34 were still 
dependent on this supposedly temporary program, and only 24 were still 
in business and actually independent from the program.
  In point of fact, the current DBE program has a dismal graduation 
rate. According to a GAO study, between 1988 and 1992, fewer than 1 
percent of the DBE firms graduated from the DBE program. The General 
Accounting Office reviewed six States to see how the States were 
preparing DBEs to compete. In 1992, those 6 States had 4,717 certified 
disadvantaged business enterprises. Out of those, 4,717 DBEs, only 17 
graduated--17 out of 4,717. And most of the DBEs had been in the 
program at least 3 years and apparently had learned very little.
  The EBE program is a much needed replacement of the failed and 
unconstitutional DBE program. Even the Department of Transportation has 
conceded that the Disadvantaged Business Enterprise Program does not 
prepare minority businesses to compete in the real world. On May 30 of 
last year, DOT acknowledged the low graduation rates of its firms and 
conceded in the fine print of the Federal Register that, ``The DBE 
program does not provide for an encompassing business development 
program.''
  In short, all Federal contracting programs should meet a four-pronged 
test. They must be constitutional, colorblind, merit-based, and 
inclusive--constitutional, colorblind, merit-based, and inclusive. My 
race-neutral amendment will ensure that the Federal highway program 
passes this test.
  It is time to end the divisive discriminatory practice of awarding 
highway and transit construction contracts based on race, gender and 
ethnicity of a company's ownership. Respect for our Constitution, our 
courts, our States, and our individual citizens demands no less.
  It is time to move beyond racial quotas and set-asides and focus our 
national effort on improving the ability of small businesses, 
especially those who are women and minorities, to compete through 
genuine outreach and business development--genuine outreach and 
business development, and that, Mr. President, is what this amendment 
would do. It would take

[[Page S1398]]

out the clearly unconstitutional Disadvantaged Business Enterprise 
Program, which is not only unconstitutional, but a conspicuous failure, 
and replace it with a race-neutral emerging business enterprise program 
that complies with the Constitution and can succeed.
  Mr. President, I will stop at this point and inquire as to how much 
time I have remaining.
  The PRESIDING OFFICER (Mr. Smith of Oregon). The Senator has 3 hours 
38 minutes remaining.
  Mr. McCONNELL. I yield to the distinguished Senator from New 
Hampshire whatever time he may need.
  Mr. SMITH of New Hampshire. The Senator caught me a little bit by 
surprise. I appreciate the Senator yielding. I will take 3 or 4 minutes 
to make some comments, Mr. President, on behalf of my colleague's 
amendment.
  Again, the Senator from Kentucky is out in front taking the lead on 
an issue which, when you look at it on the surface, appears to be the 
right thing, but when you look deeper, you know that it is not. Again, 
he has had the courage to take a lead on this.
  This amendment would, I believe, end one of the most costly and 
unfair and unconstitutional, as the Senator from Kentucky has said, 
minority set-aside programs in our Federal Government. As the Senator 
has already said, ISTEA mandates that ``not less than 10 percent'' of 
Federal highway and transit funds be allocated to ``disadvantaged 
business enterprises.'' These are firms owned by officially designated 
minority groups presumed to be socially and economically disadvantaged.
  The Senator from Kentucky already mentioned the Supreme Court case. 
In the 1995 case, the Supreme Court spoke on this issue in Adarand v. 
Pena. Senator McConnell has gone into the details extensively, and I 
will not go back through it. But in that decision, as he has said, it 
is explained that not only the Supreme Court but a U.S. district court 
has ruled that this minority set-aside program is unconstitutional.
  It does seem somewhat, I don't want to say odd, but maybe ironic that 
we on the floor of the Senate have to debate to take language out 
through an amendment a piece of legislation that has already been ruled 
unconstitutional. I don't know what that says about the process, but it 
does not sound very good to me that we have to do that.
  It would seem to me that the logical thing to do would be to not have 
it in here; in other words, let's end this program and let's not have 
it in the legislation as we proceed. But it is there.
  Plain and simple, this is an affirmative action program for 
contractors. The administration's attempt to comply with the Court's 
decision by fiddling around with the DOT regulations does not meet the 
constitutional litmus test. Therefore, it is now incumbent on the 
Congress to bring ISTEA into compliance with our Constitution.
  We now have a major piece of legislation, i.e. the Intermodal Surface 
Transportation Efficiency Act, ISTEA, and in order to pass it, we have 
to bring it into compliance with our Constitution.
  It is one thing for the Federal Government to carry out unfair quota-
based programs, which most reasonable people oppose, but it is 
bordering on outrageous, if not outrageous in and of itself, to say 
that the Federal Government should now mandate these very same unfair 
quota-based systems on its face, which is exactly what is going on 
without the Senator's amendment.

  This is a time-consuming, a very costly burden to the States. Some of 
the States, like my own State of New Hampshire, simply don't have, to 
be very candid about it, some of the significantly racial minority 
populations. So what happens is, it forces us into a position where we 
have to deal with the bureaucracy and twist and turn and try to jump 
through as many hoops as possible to meet that 10 percent DBE goal, 
which, as the Senator from Kentucky mentioned, is not good public 
policy. As the Senator well knows and has said--and I agree with him--
the opportunity to gain employment ought to be based on merit, not be 
based on any type of quota.
  So by continuing this and the other 150-plus, I might add, 
preferential treatment programs--150 other preferential treatment 
programs--we are encouraging businesses to tie their business 
strategies to unconstitutional programs. As I said, what does this say 
about our process here, that we are encouraging businesses to tie their 
business strategy to something that is unconstitutional? The Court has 
spoken; two courts have spoken. Let's listen to the courts. It is 
sending the wrong message to many people, whether it is constitutional 
students or whether it is simply the minority startup businesses that 
we are trying to help.
  A better way, as the Senator has suggested, is to encourage minority 
entrepreneurs with a small business outreach program, which Senator 
McConnell has in his amendment. It is a good amendment. This 
alternative will still provide assistance to smaller minority-owned 
businesses without the heavy-handed mandate upon our States.
  Most Americans do not support preferential treatment programs, Mr. 
President, no matter where they come from or who they are supposed to 
help. We now have an opportunity to end one right here on the floor of 
the Senate, to end special preferential treatment. This is an 
opportunity to do that.
  I urge my colleagues to do two things: One, to uphold the 
Constitution, which, with all due respect to my good friend, is more 
important than the McConnell amendment, but the language of the 
McConnell amendment should be the second reason we should support it. 
So support the Constitution and support Senator McConnell and adopt the 
amendment. I yield to my colleague.
  Mr. McCONNELL. Mr. President, let me say to the distinguished Senator 
from New Hampshire, this is not exactly an isolated case. The Senator 
from New Hampshire mentioned that the trend in the courts--in fact, 
Richmond, San Francisco, San Diego, Dade County, New Orleans, Columbus, 
Louisiana and Michigan are all court cases striking down these kinds of 
preferences; in other words, striking down Government discrimination 
based upon race in general.
  What is astonishing, I agree with my dear friend from New Hampshire, 
is that this is in this bill in the wake of the decision.
  I wonder how long it is going to take, I ask my friend from New 
Hampshire, at this rate with every single aggrieved party having to 
sue, I wonder if my friend from New Hampshire has any sense of how long 
it may take to get these preferences off the books and bring American 
practice, Government practice into line with the Constitution.
  Mr. SMITH of New Hampshire. A lot longer than the Senator from 
Kentucky and I would want it to take.
  Mr. McCONNELL. We probably won't be here.
  Mr. SMITH of New Hampshire. I don't think so.
  Mr. McCONNELL. It is an astonishing development. I thank my good 
friend from New Hampshire for his important contribution.
  Mr. President, I believe the Senator from Alabama is here and would 
like to speak as well. I yield him whatever time he may need.
  Mr. SESSIONS. Mr. President, I thank Senator McConnell. I say to 
Senator Smith, we appreciate your comments and thoughtful insight into 
this very important subject for our Nation. We want to do the right 
thing with regard to all of our citizens. We want to have a nation in 
which civil rights are protected and where everyone has an equal 
opportunity to participate in the American ideal. It is a very, very 
important issue.

  I thank Senator McConnell for developing the kind of amendment that 
will accomplish, I think, the legitimate goals of those who would like 
to see more opportunity in contracting Federal road contracts while at 
the same time protecting the great constitutional privileges that all 
of us in this Nation have a right to count on.
  I serve on both the Environment and Public Works Committee, from 
which this legislation came, and the Judiciary Committee. In the 
Environment and Public Works Committee, we had no hearings, took no 
testimony, did no study as to the advisability and the practicality of 
how these preferences work out in real life.
  For a number of years, I was a U.S. attorney and had the opportunity 
to prosecute criminal cases of all kinds and sorts. I have a distinct 
recollection of a case involving a minority individual who had gotten, 
I think, a $250,000

[[Page S1399]]

contract primarily because he was a minority. He was not the low 
bidder. He got the contract because of the preference set-asides in 
this highway bill. He promptly turned around and subcontracted the 
entire contract work to another contractor, presumably not a minority 
contractor, who did all the work and, in fact, there were false 
statements made in the course of this situation, for which he was 
convicted. But there is a lot of abuse in which people put up 
individuals as straw people just to take advantage of this provision.
  There are a lot of problems with the implementation of this act that 
I could talk about at some length. Fundamentally, I will say the bill 
is not good policy. It is not the kind of interference into the bid 
process that we ought to have in this country. But secondly, and most 
important, I will talk a few minutes about the fact that it is not only 
bad policy, but unconstitutional.
  We had hearings in the Judiciary Committee on this subject, both 
before the full Judiciary Committee and before Senator John Ashcroft's 
subcommittee. The House of Representatives Judiciary Committee has also 
had hearings on this, which is chaired by Representative Canady from 
Florida, who is an eloquent spokesman on this subject, who has come to 
see, with absolute clarity, the unconstitutionality and the unfairness 
of the racial set-asides that we now have in this bill.
  Let me say this: The McConnell bill is good. It is a good approach 
because it encourages new companies; it helps people get involved and 
get into business for the first time and gives them a lot of other 
advantages. We ought to do that. We ought to have outreach. We ought to 
have affirmative action. That is a good ideal for America. It is 
something that ought to be a part of our law insofar as it is 
appropriate to do so. But it is wrong to have quotas and set-asides.
  We first started affirmative action on March 6, 1961. That was when 
President John F. Kennedy issued this order:

       The contractors will take affirmative action to ensure that 
     applicants are employed and treated during their employment 
     without regard to race, color, creed or national origin.

  That is an ideal with which we can all agree. That is an ideal we can 
all support. It is something we ought to support and we ought to 
believe in in this Nation. But President Kennedy did not go as far as 
we have gone today, where we have actual set-asides that give 
preferences to one group of people on account of their race and denies 
a benefit or an equal opportunity to another individual on account of 
their race. That is what is objectionable about this legislation.
  Let me just say, how did we get to this point? I have, I think, an 
idea about how we got to this point.
  Most of us recognize and can remember that there was systematic 
discrimination against African Americans and other minority groups in 
this country as little as 30 years ago by law, in some instances. This 
was an unacceptable event.
  When the courts dealt with that, whether it was a police department 
or a fire department or a State agency, they would enter remedial 
orders, and they would put demands on those agencies to take immediate 
steps to make up for the explicit discrimination that had been suffered 
in that agency or department. The courts have always affirmed that.
  Somehow we slipped from these situations into generalized quotas as 
part of American law. That is a move which is not justified by policy 
or law, and the United States Supreme Court, and other courts, are 
beginning to make quite clear that it is unacceptable.
  The people of California, with proposition 209, spoke quite clearly 
as to their view about it, and the courts have promptly affirmed 
proposition 209, even though this administration and the President of 
the United States filed a brief saying it was unconstitutional. The 
Ninth Circuit Court of Appeals ruled that there is no doubt that 
proposition 209, which prohibited these kinds of quotas and set-asides, 
was constitutional. I think that we have to deal with this issue 
because it will not go away.

  I was present in the Judiciary Committee hearing when Mr. Pech, who 
was the chief operating officer of Adarand Constructors, testified. And 
I have done some research into the law. And I would like to share my 
thoughts with this body.
  The Constitution requires all of us, not just judges, to uphold the 
Constitution. We swore an oath, as is on that chart to do just that. I 
believe section 1111 of the ISTEA legislation is clearly 
unconstitutional under the Adarand Constructors, Incorporated v. Pena 
case, the landmark 1995, Supreme Court decision.
  Adarand involved the same program with the exact same language in 
this new authorization that was in the previous bill. That was the 
language the Supreme Court was dealing with and reviewed. In Adarand, 
the Court ruled all--all--governmental racial classifications, like the 
ones we have in this legislation, like the one it was considering in 
the Adarand case--the same language--are subject to the strictest 
judicial scrutiny.
  The Court held ``federal racial classifications, like those of a 
state, must serve a compelling governmental interest and must be 
narrowly tailored to further that interest.''.
  It ``must be narrowly tailored.'' There must be a compelling 
interest.
  Now, some make the argument--and this is a matter we have heard a lot 
about recently--some make the argument that the Supreme Court did not 
strike down this program in Adarand. But I just say this. It did not 
uphold it, clearly. What they did was set a standard for the validity 
or invalidity of this program. And they referred the case back to the 
district court who tried it. And it gave that district court remand 
instructions. They remanded it, and they gave them instructions as to 
how they should evaluate whether or not this statute violated the 
Constitution.
  Justice Scalia, who was on the Supreme Court, wrote in his 
concurrence:

       [i]t is unlikely, if not impossible, that the challenged 
     program would survive under this understanding of strict 
     scrutiny, but I am content to let that be decided on remand 
     [by the district court].

  Based on the instructions and the law, as set forth by the Supreme 
Court, it was not surprising that on remand the Federal district court 
properly ruled, on summary judgment, that this program, this set aside 
program, was unconstitutional. They left no doubt about the 
constitutionality of this program. The district court stated:

       I find it difficult to envisage a race-based classification 
     that is narrowly tailored. By its very nature, such a program 
     is both underinclusive and overinclusive.

  Now, those are legal terms. Somebody might think, ``What does that 
mean, `underinclusive' and `overinclusive'?'' What the judge was saying 
simply: It is unfair. It overincludes people beyond who ought to be 
included; and when you do that, you underinclude people who have a 
right to be included in the bid process, and have a right to 
participate in these programs.
  That is the fundamental constitutional wrong. It gives advantages to 
people who do not deserve it; and it is a disadvantage to people who do 
not deserve to be disadvantaged. That is a fundamental constitutional 
principle. It will not go away.
  So the Court also enjoined, issued an order stopping the defendants 
from administering, that is, Secretary Pena, from administering section 
1003(b) of the ISTEA.
  So I would say to anybody who looks at this matter fairly and 
objectively, without hesitation, there is no doubt that under the 
current state of the law, regarding this specific statute, it has been 
declared unconstitutional by the courts of the United States.
  Now, yes, they can appeal this district court ruling. But based on 
the plain holdings of the Supreme Court, which the district judge 
clearly followed in his opinion, I submit to you there is virtually no 
chance that it will be reversed. The Supreme Court of the United States 
cares about this issue. They care about making sure everybody in 
America has equal treatment. They want to see race relations in America 
improve, but they have studied it and they have thought about it.

  The courts have fulfilled their responsibility, in my opinion. And 
what have they thought? And what have they decided? Our federal courts 
have looked down the long road into the future, and they have asked 
themselves: Will this Nation be better served if we allocate goods and 
resources and contracts based on the color of one's skin?

[[Page S1400]]

 Is that a defensible policy for a nation to undertake? Can we do that? 
And they have concluded, no, you cannot, because when you do that you 
deny someone else an equal right to apply.
  Other Supreme Court cases have rendered very similar opinions. Bush 
v. Vera, Miller v. Johnson, Shaw v. Reno, and Richmond v. J.A. Croson 
Co. all have subjected Government racial preferences and 
classifications to the strictest scrutiny. In each one of these cases, 
the Court has found these racial classifications unconstitutional.
  Section 1111 simply reenacts, without change, the same statutory 
language that was invalidated in Adarand Constructors, Inc. v. Pena. 
Mr. President, section 1111 literally does not change one single word 
in the definition of ``socially and economically disadvantaged 
individuals''.
  Both the previous ISTEA legislation and section 1111 refer to the 
exact same definition in the Small Business Act. This definition 
states--and I have the legislation here before me--it states that 
``contractors shall presume that socially and economically 
disadvantaged individuals, including Black Americans, Hispanic 
Americans, Native Americans, Asian Pacific Americans, and other 
minorities or any other individual found to be disadvantaged by the 
administration under the Small Business Act, shall be presumed to meet 
the standard for socially and economically disadvantaged.''
  So that is statute--the problem is not regulations. Some would say 
``Well, you're quoting from regulations. They might change the 
regulations.'' This is the Small Business Act. That is specifically 
referred to in this highway bill to define what ``socially and 
economically disadvantaged individuals'' are. And it gives a racial 
preference. It says that a black individual is presumed to be socially 
or economically disadvantaged whereas a struggling white businessman 
may not.
  So what we have here is an overtly racial Government classification. 
That is why the Supreme Court is concerned about it. Consequently, 
nothing in this reenactment does anything to strengthen the arguments 
that this section is constitutional. We, indeed, held no hearings on 
it.
  Moreover, there is no legislative record to support this racial 
classification. The Environment and Public Works Committee did not hear 
any testimony concerning the constitutionality of this section or the 
regulations promulgated pursuant to its identically worded predecessor. 
The only hearings we had were in the Judiciary Committee, as I 
mentioned earlier.
  Now, the Clinton administration suggests that the new regulations 
promulgated by the Department of Transportation somehow strengthen the 
case for the constitutionality of this provision. This, however, is a 
totally ineffective argument. Subsequent regulations simply cannot 
repair a statute that is, on its face, unconstitutional. It is 
difficult for me to see how anybody would argue otherwise. The courts 
have held--and I will read the opinion of the district judge here, the 
district judge, when he found this thing unconstitutional. He said:
  ``The statutes and regulations concerning the SCC program are 
overinclusive, and they presume that all those in the named minority 
groups are economically or, in some act and regulation, socially 
disadvantaged. This presumption is flawed.''
  The Court held that both the regulations and the statute 
are unconstitutional. The statute is what the Supreme Court dealt with 
when it sent the district judge its instructions.

  Finally, some suggest that the Adarand v. Pena decision does not 
render section 1111 unconstitutional. They point to the language of 
Justice O'Connor when she wrote in the opinion:

       We wish to dispel the notion that strict scrutiny is 
     ``strict in theory but fatal in fact.'' The unhappy 
     persistence of both the practice and the lingering effects of 
     racial discrimination against minority groups in this country 
     is an unfortunate reality, and the government is not 
     disqualified from acting in response to it.

  So they say, ``Jeff, she just said what you say is not true. Adarand 
really did not close the door on this statute.'' But, Mr. President, 
these advocates do not read the very next sentence in Justice 
O'Connor's decision where she immediately explains this quotation. 
Justice O'Connor's next sentence cites, as an example, a State 
governmental agency that had been found to have been engaged in 
``pervasive, systematic, and obstinate discriminatory conduct.'' All 
Justice O'Connor says in this passage is that proven, widespread, 
systematic discrimination can justify ``a narrowly tailored race-based 
remedy.'' In other words, a limited racial preference can be 
constitutional as a remedy for a proven case of specific governmental 
discrimination.
  However, section 1111 is not a remedy for specific governmental 
racial discrimination. As I said earlier, there has been no 
determination in this case that the administration of the Federal 
Highway System is systematically and pervasively biased in its 
operation.
  Mr. McCONNELL. Will the Senator yield?
  Mr. SESSIONS. Yes.
  Mr. McCONNELL. I was listening carefully to what the Senator from 
Alabama had to say. So the law is, as I understand what the Senator 
from Alabama had to say, that the remedy has to be narrowly tailored to 
meet actual past discrimination. Is that essentially the standard here 
the Senator from Alabama is talking about?
  Mr. SESSIONS. That is correct. Such is the essential holding and the 
basic law of this country. Where you have systematic, proven 
discrimination, a court can issue a remedy that may provide advantages 
to one racial group who has been discriminated against.
  Mr. McCONNELL. So that group, I say to my friend from Alabama, 
actually has to have suffered discrimination?
  Mr. SESSIONS. Certainly.
  Mr. McCONNELL. The Court was saying, you could not just carve out a 
big part of a program and hand it out to people based upon what color 
they are or what gender they are; is that correct?
  Mr. SESSIONS. Absolutely. This is not a close question.
  Mr. McCONNELL. I ask the Senator from Alabama, isn't that what we are 
talking about here, what, in fact, has been done in this bill that we 
are trying to remedy with this amendment?
  Mr. SESSIONS. Precisely so. The Senator from Kentucky is precisely 
correct. He has gone straight to the heart of this matter and I think 
makes a good point.
  You know, many of us go around, and we blame Federal judges for much 
of the litigation and problems and some of these ideas that many people 
say are liberal ideas. But in this case, I think it is the Congress 
that has been passing legislation that goes beyond its bounds and is 
being brought to task by the courts.
  So, fundamentally, I just further state that Environment and Public 
Works Committee made no findings, we made no factual analysis of the 
interstate highway program in order to determine there is some sort of 
systematic discrimination ongoing that ought to be corrected. In fact, 
I think a good argument can be made that the objectivity and fairness 
of the bid process is virtually above reproach. So there is just no 
basis for this. That is why it has no chance, in my opinion, of ever 
passing Supreme Court muster. And this Congress ought not be passing a 
bill that is bad public policy and is unconstitutional.
  Mr. President, I want to read a quote from Mrs. Valery Pech who 
testified on this subject. She is the wife of Mr. Randy Pech who owns 
Adarand Constructors. She is an owner herself, I believe. She said:

       We started our family-owned company in 1976 specializing in 
     the installation of highway guardrail systems. In August of 
     1989, we lost yet another Federal highway contract on which 
     we had submitted the lowest bid. Adarand lost this job and 
     numerous others, past and future, not because of poor 
     reputation, not because our price was too high, not because 
     we limited our bid date, not for any other reason but one. 
     Randy, as owner and operator of Adarand is a white male. We 
     didn't like it. We fought the decision. We contracted a legal 
     foundation to seek help. Six years later, in 1995, the 
     Supreme Court ruled for us and against race-based 
     decisionmaking in the Adarand Constructors case.
       Adarand is the only nonminority guardrail business in the 
     State of Colorado. All our competitors are classified as 
     disadvantaged business enterprises. Their status is DBE, and 
     contracts are awarded based solely on the owner's race or 
     gender regardless of whether or not they have suffered past 
     discrimination.

  She lists those competitors that they compete against. She notes all 
of these

[[Page S1401]]

contractors have been in business--her competitors are minority owned 
for over 10 years and have solid reputations for getting work done. 
These four competitors get 95 percent of their work by being low bidder 
in other than Government contracts; yet when they bid against Adarand 
for Government contracts, they get a preference and are able to get the 
bid, although they bid higher.
  Do you see the unfairness of it? These are strong competitive 
companies. One simply happens to be headed by a Hispanic and one is 
not. The one who is not gets hurt, and the other one has an advantage. 
That is why the polls of all racial groups feel that these are not fair 
and just preferences.
  Mr. President, I will not belabor the subject. Again, I want to 
congratulate the Senator from Kentucky for his leadership in coming 
forward with a remarkable proposal that gives opportunity, gives it 
affirmatively, reaches out to help disadvantaged, gives them a chance 
to be successful in getting Government contract work, but at the same 
time does not violate the Constitution.
  In conclusion, I have no doubt that this section is unconstitutional. 
It is neither supported by a compelling Government interest nor is it 
narrowly tailored. Therefore, I urge the Senate to consider Senator 
McConnell's amendment. I cannot in good conscience vote for legislation 
that I consider to be unconstitutional.
  Mr. WARNER. Mr. President, I say to the distinguished Senator from 
Kentucky, I do not wish in any way to interfere in his presentation, 
but there are some of us who have a different point of view. I am 
wondering if I could just talk about 3 or 4 minutes on this amendment.
  Mr. McCONNELL. I say to my friend, that is fine. I have Senator 
Ashcroft here in support of the amendment, and we will go to him when 
you complete.
  Mr. WARNER. This will be a very thorough debate because it is a 
serious issue. It seems to me there are many facets to this debate. One 
is the important one raised by my colleagues who have just been 
speaking as to the constitutionality. Then each Senator has to reach 
his or her own opinion on the constitutionality. Then there seem to be 
other factors that have to be taken into consideration.
  I rise to alert Senators to take a look at the importance of this 
amendment. It so happens this bill is mine. I was the author of it as 
chairman of the subcommittee. We considered this issue, and I 
determined we should keep this provision in, despite the Adarand case 
and the development of the law in the course of the writing of the 
bill.
  I urge Senators to begin to study, as a part of their preparation for 
floor statements and decisions, the important aspect of this amendment 
on the growth of the participation by women in this country in their 
ability to compete as professionals in this area of work.
  There are charts available; for example, in Virginia, the percent of 
growth since 1987 in firms of women, an 84 percent increase in the 
number of firms that are managed, owned, and operated by women in my 
State. Each State is on this chart. I urge Senators to look at that.
  Then the department of Federal highways, DOT, has prepared for each 
State a chart showing the percentage of these DBE highway contracts 
that go to women. Particularly in my State, 44 percent of these 
contracts under the DBE Program go to firms that in this instance are 
nonminority women--a very significant amount of work.
  Another chart that Senators should look at is a comparison of the 
Federal highway programs that have been since 1983 subject to the DBE 
provisions, and the participation by the minority firms in the Federal 
program as compared to the participation in State programs. My State is 
not on this particular chart, but, for example, I will take 
Connecticut, 15.7 percent participate under the Federal program; 5.2 
percent under the State program. Arkansas, 11.9 percent under the 
Federal programs; 2.9 percent under the State programs. I will let the 
distinguished Senator from Rhode Island address this chart; 12 percent 
in Rhode Island under the Federal program; 0 percent under the State 
program. Maybe there is some explanation.
  I just rise to alert Senators to include this as part of their study.
  Mr. President, some have made statements to the fact that the DBE 
Program has not been effective. I want to address--and indeed rebut--
that point.
  Let's look at the effect on women-owned highway contracting 
businesses. The effect has been dramatic. Since 1987, when women were 
added to the DBE, women-owned highway contracting businesses increased 
in number by 157 percent.
  And women-owned businesses get a significant portion of the DBE 
funds. Here are some examples:

Alaska: 75 percent of DBE funds go to women ($11.8 mil. of $15.7 mil.)
Indiana: 68 percent of DBE funds go to women ($21.5 mil. of $31.5 mil.)
Mississippi: 87 percent of DBE funds go to women ($19.5 mil. of $22.4 
    mil.)
New Hampshire: 63 percent of DBE funds go to women ($6.0 mil. of $9.6 
    mil.)

and in my State of Virginia 44 percent of DBE funds went to women 
($14.1 mil. of $32.6 mil.).
  In sum, the DBE Program has helped promote women's participation in 
the construction industry, and will continue to do so under this bill 
and the new regs.
  Without this program, it is questionable that women would have this 
opportunity. Let's compare some State programs--without DBE--and their 
Federal aid programs:

------------------------------------------------------------------------
                                                  Federal     State (No 
                                                   (DBE)         DBE)   
------------------------------------------------------------------------
Arkansas......................................         11.9          2.9
Louisiana.....................................         12.4          0.4
Missouri......................................         15.1          1.7
------------------------------------------------------------------------

  I believe data like that shows that DBE plays a critical role in 
allowing women to compete. This is not a giveaway; they must still be 
the low bidder, obtain bonding, and perform the contract according to 
its terms.
  The case for opportunities for minorities is equally clear. Thanks to 
the DBE Program, persons of all race and ethnicity have had the 
opportunity to compete for federally assisted State highway contracts.
  With regard to the debate about the constitutionality of this 
program, I reviewed what the Supreme Court said in the Adarand case.
  Justice O'Connor, for the majority, made it clear that the Federal 
Government may undertake affirmative action programs as long as they 
meet the ``strict scrutiny'' standard. The Court did not outlaw Federal 
affirmative action.
  Indeed, Justice O'Connor stated:

       When race-based action is necessary to further a compelling 
     interest, such action is within constitutional constraints if 
     it satisfies the ``narrow tailoring'' test . . .

  As for the district court, to which the case was remanded, Judge 
Kane's decision did not ban affirmative action either.
  When Judge Kane looked at the program, he said:

       I conclude Congress has a strong basis in evidence for 
     enacting the challenged statutes, which thus serve a 
     ``compelling governmental interest.''

  In other words, the program achieves one of the two ``strict 
scrutiny'' requirements.
  As for the second requirement of ``narrow tailoring,'' U.S. District 
Judge Kane stated the program's regulations did not meet that 
requirement.
  But given that the Department of Transportation is readying new 
regulations that are specifically designed to meet the narrow tailoring 
requirement, it seems to me that that problem is going to be taken care 
of.
  In sum, the DBE Program will be in full compliance with Adarand. 
Indeed, as the chairman of the Subcommittee on Transportation, I intend 
to make sure of that and hold the Department to that standard.
  Therefore, I believe that the DBE Program in this bill is both 
critical to opportunities for women and minorities in the highway 
construction industry, and constitutional. It is a program important to 
a wide range of socially and economically disadvantaged persons, 
including many in the State of Virginia. Thus, I will be supporting the 
committee bill and opposing the pending amendment.
  Mr. President, I ask unanimous consent that two tables be printed in 
the Record relating to this subject matter.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

[[Page S1402]]



                 HIGHWAY CONTRACTING DOLLARS IN VIRGINIA                
------------------------------------------------------------------------
                    Federal-aid  Federal-aid                            
                      dollars     dollars to   Annual DBE    Actual DBE 
       Year           awarded        DBEs         goal     participation
                     $(1000)\1\   $(1000)\1\   percentage    percentage 
------------------------------------------------------------------------
1991..............      142,821       23,036         12.0          16.1 
1992..............      131,660       20,903         12.0          15.9 
1993..............      197,956       31,915         12.0          16.1 
1994..............      322,354       48,754         12.0          15.1 
1995..............      220,010       32,688         12.0          14.9 
1996..............      246,195       32,633         10.0          13.3 
------------------------------------------------------------------------
\1\ Contracting dollars awarded by the State for the Federal-aid highway
  program, not the annual apportionment.                                

       Women and Minority-Owned Businesses Share of the Federal 
     Highway Program: In 1996, businesses owned by non-minority 
     women received $14.1 million (or 5.7% of total contracting 
     dollars awarded) and minority-owned firms received $18.5 
     million (7.5%). Non-DBEs got the remaining 86.8%.
       DBE Firms Ready and Able to Perform Highway Construction 
     Work: There are 458 DBEs qualified as prime contractors in 
     the highway construction industry in Virginia. The State 
     reports that there are more qualified DBE firms than non-DBE 
     firms.
       Without DBE Programs Prime Contractors don't use DBE 
     Subcontractors on State Contracts: In 1996, DBEs were 
     successful as subcontractors in the federal-aid program, but 
     there was a 34% drop in the use of DBE subcontractors in the 
     state program.

                 Women-Business-States 1996 Statistics

       A state-by-state listing of the number of all women-owned 
     companies in 1996 (in thousands) and the percentage change 
     from 1987, as compiled by the National Foundation for Women 
     Business Owners:

------------------------------------------------------------------------
                                                              Percent of
                     State                        Firms in      growth  
                                                    1996      since 1987
------------------------------------------------------------------------
Alabama.......................................       98,000         87.9
Alaska........................................       26,000         69.6
Arizona.......................................      130,000         97.3
Arkansas......................................       68,000         76.0
California....................................    1,082,000         77.7
Colorado......................................      160,000         64.9
Connecticut...................................      103,000         56.2
Delaware......................................       21,000         95.8
District of Columbia..........................       19,000         59.2
Florida.......................................      497,000        106.3
Georgia.......................................      203,000        112.4
Hawaii........................................       39,000         66.8
Idaho.........................................       42,000        104.1
Illinois......................................       37,000         74.8
Indiana.......................................      167,000         71.0
Iowa..........................................       92,000         58.6
Kansas........................................       84,000         43.5
Kentucky......................................       99,000         70.1
Louisiana.....................................      102,000         67.7
Maine.........................................       48,000         85.3
Maryland......................................      167,000         87.7
Massachusetts.................................      192,000         58.5
Michigan......................................      263,000         80.4
Minnesota.....................................      166,000         73.5
Mississippi...................................       55,000         73.9
Missouri......................................      155,000         62.1
Montana.......................................       34,000         76.7
Nebraska......................................       57,000         63.3
Nevada........................................       47,000        130.0
New Hampshire.................................       42,000         69.6
New Jersey....................................      221,000         72.7
New Mexico....................................       57,000        108.0
New York......................................      527,000         70.2
No. Carolina..................................      198,000         94.3
No. Dakota....................................       19,000         37.8
Ohio..........................................      306,000         82.5
Oklahoma......................................      107,000         54.3
Pennsylvania..................................      300,000         74.7
Rhode Island..................................       29,000         84.8
So. Carolina..................................       90,000         93.8
So. Dakota....................................       24,000         65.2
Tennessee.....................................      139,000         89.9
Texas.........................................      552,000         70.1
Utah..........................................       63,000         95.5
Vermont.......................................       29,000         94.3
Virginia......................................      189,000         84.0
Washington....................................      188,000         91.8
West Virginia.................................       40,000         64.6
Wisconsin.....................................      134,000         78.5
Wyoming.......................................       19,000         63.7
                                                                        
United States.................................    7,951,000         77.6
------------------------------------------------------------------------
Note.--The growth rate in women-owned construction contractors since    
  1987 was 157% (2.6%-6.7%).                                            
                                                                        
Copyright (C) 1996 The Associated Press 3/26/96.                        

  I yield the floor.
  Mr. McCONNELL. Mr. President, if the Senator from Montana would like 
to rotate back and forth, that is certainly fine with me. Senator 
Ashcroft has been here and is anxious to speak. I don't particularly 
want to get into a dispute over the speaking order. Is the Senator from 
Montana desiring to speak?
  Mr. BAUCUS. I have another commitment that starts in about 5 minutes, 
so if I could speak now that would help this Senator.
  Mr. McCONNELL. I yield the floor.
  Mr. BAUCUS. I yield myself such time as I may consume.
  Mr. President, this obviously is a very important debate. It is the 
first civil rights debate we have had in a long time. It is very 
important that the Senate take this extremely seriously because it is 
such an important matter. It goes to the heart of what it is to be an 
American.
  I begin by emphasizing a fact which puts us into a bigger context, 
and that is all of us as Americans want to expand the economic pie. We 
all want to encourage more American entrepreneurs to start new 
companies, start more companies, create new jobs. That is especially 
true for women and for minorities.
  We, as Americans, will all be a lot better off and the country will 
be better off if there are more successful businesses owned by women, 
more owned by African Americans, more owned by Native Americans. All 
Americans, as a consequence, will have more jobs, will have more 
community leaders and will have more positive role models for our 
daughters and our sons. We will be a more cohesive country, a better 
country. I don't think there is any doubt about that. I think there is 
a consensus about that.

  The question, of course, is how we can best accomplish that goal. The 
so-called DBE Program, the Disadvantaged Business Enterprise Program, 
takes an important step to accomplish that objective by giving women 
and by giving minority groups a fair shot at that economic opportunity. 
It gives them a seat at the table.
  I will take a few moments to explain the program. First, it was 
created in 1982 as part of the highway bill signed by President Reagan. 
It began in 1982. It was then expanded in 1987 when the Senate added 
women-owned construction businesses to the category of businesses that 
are presumed to be disadvantaged.
  Let me emphasize this point: The program we are talking about is 
based on the small business program usually referred to as the section 
8 program. But it is broader than section 8. In 1987, we expanded the 
highway Disadvantaged Business Enterprise Program to include not only 
construction companies owned by members of minority groups but also 
construction companies owned by women. The expanded program was 
continued without change in ISTEA. That is, in the highway bill passed 
in 1991, and the committee has here proposed to continue it again in 
ISTEA II, the highway bill before the Senate.
  How does the program work? The law says unless the Secretary provides 
otherwise, at least 10 percent of the money expended on highway 
contracts under the official highway program should go to small 
businesses owned by socially and economically disadvantaged 
individuals. So who qualifies? First, you have to be a small business 
within the meaning of the Small Business Act. Beyond that, you have to 
be socially and economically disadvantaged. There is the presumption 
that women and members of certain minority groups are in fact 
disadvantaged. It is only a presumption, a presumption that can be 
overcome primarily in two ways. One is that a person who is not a 
member of one of the presumptive groups can show he or she is socially 
or economically disadvantaged. That can be shown. The other way is for 
a third party to challenge the eligibility of a particular contractor, 
such as a competitor, by showing that the person is not, in fact, 
disadvantaged.
  Under our Department of Transportation regulations, each State--let 
me underline the word ``State''--each State highway program must take 
various steps to reach out to disadvantaged businesses. In addition, 
each State--underline again ``State''--must establish an overall goal 
for the percentage of federally funded highway construction dollars 
going to women and minority-owned businesses. Once that goal is 
established--again, it is a goal; some States have more than 10 
percent; some States goals are lower than 10 percent. It is a goal 
depending on the State. Once the goal is established, the State highway 
department establishes another goal for each particular contract. The 
goal doesn't have to be 10 percent; instead the State can look at the 
type of work, and the pool of available subcontractors and decide to 
set a higher goal for certain contracts and a lower goal for others.
  Once the goal is established for a contract, each contractor must 
make a good-faith effort to meet the goal--not mathematically required, 
not quota required, but a good-faith effort to meet it. That is all 
that the program is. If the contractor does make a good-faith effort 
but finds the qualified subcontracts are not available or that their 
bids are too high, the contractor has satisfied his obligation. In a 
nutshell, that describes the program.
  So how has it worked? What are the results? The program has been in 
place now for about 15 years. During that time, the percentage of 
Federal highway expenditures going to disadvantaged businesses has 
risen from barely 8 percent in 1992 to almost 15 percent today. In my 
State of Montana, 1996, the State expended $133 million on ISTEA or 
highway projects. Of that, $27 million--slightly more than 20 percent--
went to DBE's.
  To companies like Omo Construction in Billings, MT--Ron Omo started 
out

[[Page S1403]]

with a pick up, that is all he had, and the will to be his own staff. 
He was certified as a DBE in 1986. In 1997 his company received $4 
million in prime contracts and subcontractors.
  Or Greenway Enterprises, in Helena, which is run by Dee Hoovestall, 
who started out with a backyard seeding company and now runs a large 
construction company in my State.
  There are others, people who have created jobs and improved our 
communities. With that as background, I would like to respond to the 
principal criticisms that have been made of the Disadvantaged Business 
Enterprise Program.
  Three points: First, the program is constitutional; second, the 
program is fair; and third, it works.
  It has been argued that the Disadvantaged Business Enterprise Program 
is unconstitutional. I disagree. There are important constitutional 
questions, and they deserve careful attention, but when you look at the 
decision of the Supreme Court, the decisions of the district court, and 
the new proposed regulations, the program passes constitutional muster.
  Let's start with the decision of the Supreme Court. In the Adarand 
decision, the Supreme Court held that a Federal affirmative action 
program is subject to what the lawyers call ``strict scrutiny.'' In 
other words, to pass constitutional muster, the Government must show 
that the program furthers a compelling interest--and that is a given in 
this case; the lower court even found that--and also uses a narrowly 
tailored means to do so. Strict scrutiny means compelling Government 
interest and, second, that the program is narrowly tailored.
  The Supreme Court did not hold that the program was unconstitutional. 
Again, the Supreme Court did not hold that the program was 
unconstitutional. Nobody can refute that statement.
  In fact, the Court went out of its way to say that subjecting the 
Federal affirmative action program to strict scrutiny was not 
equivalent to finding that the program is unconstitutional.
  In a majority opinion, Justice O'Connor said:

       We wish to dispel the notion that strict scrutiny is 
     ``strict in theory, but fatal in fact.'' . . . the unhappy 
     persistence of both the practice and the lingering effects of 
     racial discrimination against minority groups in this country 
     is an unfortunate reality, and government is not disqualified 
     from acting in response to it. . . .

  The Court gives some examples and then it says:

       When race-based action is necessary to further a compelling 
     interest, such action is within the constitutional 
     constraints if it satisfies the ``narrow tailoring'' test 
     this Court has set out in previous cases.

  Having established that strict scrutiny applies, the Supreme Court 
remanded the case so that the lower court could consider whether the 
program furthers a compelling interest and is narrowly tailored.
  The district court judge issued its opinion in June of last year. It 
is a mixed bag.
  After reviewing the legislative history, the judge found that 
``Congress had sufficient evidence, at the time these measures were 
enacted, to determine reasonably and intelligently that discriminatory 
barriers existed in Federal contracting.''
  Therefore, he concluded that ``Congress has a strong basis in 
evidence for enacting the challenged statutes'' and that the program 
was justified by a compelling Government interest. That was the 
district court speaking.
  Then the judge turned to the second part of the test, narrow 
tailoring.
  Looking at the details of the Federal lands highway program, he 
concluded that it was not flexible enough or sufficiently related to 
past discrimination to meet the narrow tailoring test. Therefore, 
because the program did not pass both parts of the strict scrutiny 
test, he held as a district court judge that it was unconstitutional.
  Let me make three points about this decision.
  First, the decision itself applies only to the Federal lands highway 
program in Colorado.
  Second, a single district court's decision that a Federal statute is 
unconstitutional is, obviously, not the last word. Such decisions 
frequently are reversed on appeal, and this decision has been appealed.
  In fact, there are many law professors who have written that, in 
their view, the district court decision that the statute is 
unconstitutional is in error.
  Third, the court was looking at the current program. But that program 
is changing.
  A few years ago, President Clinton ordered a review of all Federal 
affirmative action programs. In response, Secretary Slater has proposed 
significant changes to the DBE Program, designed to make the program 
more flexible, more targeted, and, in a nutshell, more narrowly 
tailored. The proposed new rules would make several important changes.

  First, they replace the 10 percent goal with a new goal that's based 
on an estimate of the extent to which discrimination has affected 
construction contracting in each State. Again, no numerical goal.
  Second, they give more emphasis to incentives like outreach and 
technical assistance.
  Third, they confirm that contract goals are not binding. If a 
contractor makes a good-faith effort to find qualified women or 
minority-owned subcontractors, but fails to meet the goal, there is no 
penalty. If you do your best, that is good enough.
  Moreover, the regulations allow the Secretary to waive the 
requirements if a contractor comes up with an alternative approach that 
is as good or better then the approach in the rules.
  Putting all this together, the Supreme Court held that the program is 
subject to strict scrutiny, but emphasized that it does not mean that 
the program is unconstitutional.
  The only district court to consider the question held that there is a 
compelling interest, but not narrow tailoring. The proposed new rules 
directly address narrow tailoring by making the program even more 
flexible and targeted. In light of this, I believe that the DBE Program 
is constitutional.
  My second point is that the program is fair. It's fair because it 
helps women and minorities get a seat at the bidding table--not the 
only seat, not the best seat, but simply a seat at the table, an 
opportunity to compete against equally qualified contractors.
  Let's face the facts. We all wish we lived in a society that does not 
discriminate based on gender or race. Well, we don't. Women and members 
of minority groups do face barriers that the rest of us do not. That is 
why the DBE Program was created. That is why it was expanded in 1987 to 
include women.
  Let me give you an example. In 1984 the Transportation Subcommittee 
held an oversight hearing to review the implementation of the 1982 
highway bill. A woman named Wendy Johnson testified about the 
discrimination in the construction industry. She said:

       Few, if any, of the major contractors of State departments 
     of transportation are making aggressive, affirmative efforts 
     to recruit women . . . Yet, we have documented that many 
     women want and need these jobs.

  Let me make a point about discrimination another way. Look at the 
statistics. Women still earn only 72 percent of what men earn for 
comparable work. Women own about one-third of all small businesses. But 
women-owned businesses only receive 3 percent of Federal procurement 
dollars. Minorities make up 20 percent of the U.S. population but own 
only 9 percent of the construction businesses, and those businesses 
receive only 4 percent of construction receipts.
  According to the General Counsel of the Transportation Department, 
``Minority and women-owned firms report that they are routinely unable 
to secure subcontracts on private work where there are no affirmative 
action requirements and that white-owned prime contractors reject 
minority or women-owned firms even when they offer the lowest bid.''
  The DBE Program helps women and members of minority groups overcome 
these barriers. That is why, to my mind, the program is fair.
  My third point is that the disadvantaged business----
  Mr. WARNER. If the Senator will yield, I think that is a very 
important point, and it supplements what I brought to the attention of 
the Senators earlier. They better do a little homework on this issue as 
they approach this particular amendment.
  Mr. BAUCUS. That is a very good point, particularly as to how much 
this has helped women become an equal force in this society--or getting 
there.

[[Page S1404]]

  Third, the Disadvantaged Business Enterprise Program works. After the 
program went into effect, the percentage of highway expenditures going 
to disadvantaged businesses rose significantly, from 8 percent in 1982 
to 12.9 percent in 1983. It has remained pretty stable ever since.
  The percentage of expenditures going to women-owned businesses has 
risen steadily, from 3.1 percent in 1983 to 6.7 percent in 1996. That 
is still pretty low. After all, women make up more than half of the 
population and own one-third of all small businesses. Maybe 6.7 percent 
is nothing to crow about, but it's more than double the percentage of 
expenditures that went to women-owned businesses in 1983, before women 
were added to the DBE Program.
  We can look at it another way. What would happen if this program were 
repealed? In recent years, several States have eliminated their own 
disadvantaged business enterprise programs, and the results have been 
dramatic.
  In 1989, Michigan repealed its disadvantaged business enterprise 
program for State highway contracts. Within 9 months, the percentage of 
highway dollars going to minority-owned businesses fell to zero. The 
percentage of highway dollars going to women-owned businesses receiving 
highway contracts fell to 1 percent.
  By 1996, the total percentage of women and minority-owned businesses 
receiving State highway contracts was still about 1 percent. At the 
same time, for Federal highway contracts in Michigan, operating under 
the Federal program, women and minority-owned businesses received 12.7 
percent of the contract dollars.
  In other words, on Federal highway construction projects, operating 
with a DBE program, women and minority-owned businesses received a 12 
times greater share of contracting dollars than they did on State 
projects operating without such a program. Mr. President, that is 
because the program was repealed in Michigan.
  There have been similar results in other States and cities, and this 
obviously tells us something. It is obviously a warning. That is, if we 
repeal the Federal program or cut the Federal program way back--which, 
in effect, the McConnell amendment does--opportunities for women and 
minority-owned businesses are likely to suffer a sharp decline.
  Think about what that will mean for hundreds of new, startup 
companies all across our country.
  In many cases, women and minority group members have worked for years 
to build up their companies. They have borrowed thousands of dollars 
for expensive construction equipment, all based on the expectation that 
in America they will have a fair shot, a fair shot at highway 
construction contracts.
  If now, in this bill, we eliminate the DBE Program, a lot of small 
businesses will be left high and dry.
  Pulling all this together, the Disadvantaged Business Enterprise 
Program is constitutional, it's fair, it works, and it is good for 
America. We should maintain the program, not weaken or repeal it.
  That brings me to the McConnell amendment. The amendment repeals the 
Disadvantaged Business Enterprise Program and replaces it with 
something called the ``Emerging Business Enterprise Program.'' This 
program requires each State to establish a program for outreach, 
education, and technical assistance for small businesses. But that is 
about it.
  I am all for outreach and I am all for education and technical 
assistance. Who isn't? But by eliminating contract goals--not quotas, 
but goals--the McConnell amendment dilutes the program down to almost 
nothing. And by doing so, it really misses the point.
  Women and minority group members who own small construction companies 
often do need outreach, they often do need education and technical 
assistance, but in many cases that is not enough. Even when they have 
the information and the technical skills, they often find that they 
just can't crack into the market. That is why we need to do more, why 
we need to establish goals, goals that should be flexible and should be 
based on the specific circumstances of each State--and they are. But 
without goals against which we can measure progress, our commitment to 
expanded opportunity is nothing more than an empty promise.

  Fifteen years ago, we made a commitment. We told women and minority-
owned businesses in this country that we would give them an opportunity 
to compete, we would give them a seat at the table.
  The program has worked. It has created more opportunity, not less, 
and it's still necessary.
  As President Clinton has said, ``In the fight for the future, we need 
all hands on deck, and some of those hands still need a helping hand.''
  Mr. President, I urge that we maintain our commitment to opportunity, 
to inclusiveness, and to lending a helping hand. I urge that the 
McConnell amendment be defeated.
  Mr. ASHCROFT addressed the Chair.
  The PRESIDING OFFICER (Mr. Sessions). Who yields time?
  Mr. WARNER. On behalf of the Senator from Kentucky, I yield such time 
as the Senator from Missouri wishes.
  Mr. ASHCROFT. Mr. President, I ask unanimous consent that, in 
accordance with an agreement reached between the Members on the floor, 
that Senator Kerry of Massachusetts be allowed to speak following my 
remarks.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. ASHCROFT. Mr. President, I am pleased to take part in the debate 
to reauthorize the Intermodal Surface Transportation Efficiency Act of 
1997, commonly known as ISTEA. This debate was originally scheduled to 
take place the first week in May. As we all know, the current measure 
is designed to end in the last week in April and, had we not debated 
this until the first week of May, there would have been an interruption 
in the funding and the opportunity to build highways in this country. 
So I express my appreciation to the majority leader for moving this 
debate up and making it possible for us to address this issue in a 
timely manner. When we are talking about the construction of 
infrastructure, which allows the body politic to be nourished by the 
stream of commerce, I think it is important that we don't interrupt 
that stream. I thank the majority leader.
  Although I rise to speak specifically on the amendment of the Senator 
from Kentucky, I briefly would like to talk about the underlying bill. 
I must say, I am grateful, on behalf of the citizens of Missouri, for 
the work that has been done on this bill to ensure a fair return to 
Missourians for the kind of contribution that they make to the highway 
trust fund. I especially thank the senior Senator from the State of 
Missouri, Kit Bond, for his tireless effort in this battle. No Senator 
in this Chamber, in my judgment, has made a more conscientious and 
consistent effort to make sure that there was fairness in the 
allocation of these highway resources than Senator Kit Bond.
  To me, the issue is clear, and it has been clear throughout the 
entire debate. When a Missourian fills the gas tank and pays 4.3 cents 
in Federal fuel taxes, that money should go to improving the roads of 
the State rather than paying for additional Federal spending on some 
social program in a distant State, and that is another improvement that 
this bill reflects, putting highway taxes back into the highway trust 
fund.
  Mr. WARNER. Mr. President, will the Senator yield? I compliment the 
Senator for recognizing the contributions of Senator Bond. As my 
colleague knows, a good deal of money has been added to this bill. 
Senator Bond laid the foundation, together with the Senator's support, 
whereby this became a reality in the sequencing in the Byrd-Gramm-
Baucus-Warner amendment. But that foundation was laid by the 
distinguished senior Senator. He serves on the committee and helped 
develop the underlying bill and the amendment.
  I thank the Senator for his participation. Missouri sent two strong 
proponents for this highway bill, and I compliment the Senator.
  Mr. ASHCROFT. I thank the Senator from Virginia. His recognition of 
the contribution of Senator Bond of Missouri is appreciated and 
appropriate. I think the decision, which involved both the authorizing 
committee and the Budget Committee, to dedicate the 4.3-cent fuel tax 
to highways is a good one, and I am pleased to support that aspect of 
this bill. I believe that when this is all over, Missourians will now 
see a 91

[[Page S1405]]

cent return on each dollar as opposed to a dismal 80 cents that it 
received under the former funding scheme. Under the formula that was 
passed out of the Environment and Public Works Committee, Missouri will 
receive $3.6 billion compared to $2.4 billion that Missouri received 
over the last 6 years of the 1991 highway bill. Missouri's average 
allocation per year would be around $600 million as opposed to around 
$400 million that the State received under the old bill. I believe this 
allocation of highway trust money to the development and construction 
of highways is appropriate.
  I would add that this is not taking from other Government programs. 
This is the allocation of highway trust money for highways. Uniquely, 
we are beginning to get to the place where we focus resources that we 
take from people who use the highways on the highways. That is a major 
benefit. I would like to see a 100 percent return on Missouri's 
investments. I appreciate the advancements made over the last few days, 
and I am committed to working with the Budget Committee to see that 
these additional funds are offset so that we can stay within the budget 
caps that were approved by this Congress last session.

  I quickly would like to address one more issue. This is the amendment 
that was voted on yesterday to take away State highway funds if they do 
not establish a blood alcohol content of .08 for drunk-driving 
violations. I opposed this amendment, not because I do not abhor drunk 
driving. Far too many of us have lost loved ones as a result of this 
tragedy. However, I believe States are in the best position to make the 
decision on the best way to eliminate drunk driving. The ``stick'' 
approach offered in the amendment was rejected by the 104th Congress, 
when we repealed the Federal speed limit. I believe the ``carrot'' 
approach, contained in the safety provisions of this bill, which 
contain a .08 option, is the appropriate method to allow States the 
freedom to establish comprehensive programs to discourage drunk 
driving. That is why the National Governors Association, the National 
Association of Governors' Highway Safety Representatives, the National 
Conference of State Legislatures, the National Association of Counties, 
and the American Association of State Highway and Transportation 
Officials support the safety provisions contained in the bill. I look 
forward to the continued debate on the underlying policies in this 
bill.
  Now I would like to address the policy and constitutional principles 
raised by Senator McConnell's amendment, which I have cosponsored. The 
specific issue raised by Senator McConnell's amendment is whether we 
should reauthorize provisions in the ISTEA bill which treat two 
identically situated individuals differently, based solely on their 
race. Let me just say, again, the question or issue raised by Senator 
McConnell's amendment is whether we should reauthorize provisions of 
the bill which require that we treat two identically situated 
individuals differently only because of their race.
  Specifically, a provision in the ISTEA measure requires that 10 
percent of the amounts made available under certain titles of the act 
shall be set aside for small business concerns owned and controlled by 
socially and economically disadvantaged individuals. The provision goes 
on to define ``socially and economically disadvantaged individuals'' by 
cross-reference to section 8(d) of the Small Business Act.
  If you go to that section, you will find that a Government contractor 
shall presume that ``socially and economically disadvantaged 
individuals'' include black Americans, Hispanic Americans, Native 
Americans, Asian Pacific Americans, and other minorities. The net 
effect of these provisions is that if two bids come in from two 
subcontractors, one owned by a white male and the other by a racial 
minority, and the bids are the same, or even close, the job will go to 
the minority-owned company, not the low bidder.
  I find this objectionable as a matter of public policy. But the 
question facing the Senate is more than a debate over policy. The U.S. 
Supreme Court has made it clear that a constitutional principle is at 
stake. Members of this body have differed on the question of whether 
the Government should treat people differently solely because of their 
race. Personally, I believe that we all desperately want a future of 
racial reconciliation in which race is simply no longer relevant. 
People of good faith can differ on how best to achieve racial harmony. 
My own view is that the best way is to usher in a future of racial 
reconciliation by ending race-conscious Government programs, starting 
today. You don't end racial discrimination by promoting racial 
discrimination.
  But, while the race-based set-asides in ISTEA are part of this 
broader debate about whether the Government should let racial factors 
cloud its decisions--a debate that raises difficult questions--the 
ISTEA race-based set-asides are an easy case. In the first place, the 
particular race-based set-asides in the transportation bill represent 
an issue of constitutional principle.

  We cannot evaluate these set-asides as if we were legislating on a 
blank slate. The Supreme Court, and now a Federal district court on 
remand, have considered these set-asides and declared them 
constitutionally suspect. These courts did not consider a similar 
program, or a related program, but the exact program that is at issue 
today.
  In the 1995 Adarand decision, the Supreme Court held that race-based 
Government programs are subject to the most exacting level of scrutiny. 
The Court rejected the notion that the Government's use of race should 
be subject to a more relaxed standard because the Government's stated 
purpose was assisting rather than disadvantaging racial minorities. 
Instead, the Court made clear that when the Government makes 
distinctions on the basis of race, it is engaging in a dangerous 
business, and such laws will survive only if they are narrowly tailored 
to serve a compelling Government interest.
  The Supreme Court stopped just short of declaring the program 
unconstitutional, leaving that task for the district court after any 
additional development of the record that was necessary. In June of 
last year, the district court to which the Supreme Court referred the 
measure confirmed what seemed obvious; namely, that the Federal 
Government's race-based set-asides were unconstitutional under the 
Supreme Court's demanding test of strict scrutiny. As Judge Kane 
emphasized, the race-based presumption of economic disadvantage is both 
over- and underinclusive. Indeed, the district court said it is not 
narrow at all; it is both too broad on the one side and too narrow on 
the other side. It falls because it is not narrowly tailored. Judge 
Kane observed that the Sultan of Brunei--I assume because this is an 
Asian Pacific person, a minority--in spite of being one of the 
wealthiest persons in the world, would qualify because of race-based 
consciousness that is specified in the act and would presumptively 
qualify as a disadvantaged business entity. The district court 
understands that if you are trying to correct social and business 
disadvantage, economic disadvantage, and instead of using something 
that is narrowly tailored to address social and economic disadvantage 
you use something as broad as race, you are using a category which is 
overly broad and can't be considered to be strictly tailored--can't be 
said to be narrowly tailored.
  We know there are individuals in the Asian Pacific ethnic group or 
minority who are as wealthy as any individuals in our entire culture 
and some as poor as any individuals in our entire culture. The fact is 
that the racial identity of an individual does not carry an individual 
into the specific narrow category of being socially or economically 
disadvantaged.
  My concerns with the effect of the court decisions on Congress' 
ability to reauthorize these provisions, led me to convene a hearing in 
the Constitution Subcommittee of the Judiciary Committee of the Senate, 
which I have the privilege of chairing, to examine the 
constitutionality of the provision. At that hearing we were privileged 
to receive testimony from Valery Pech, who, along with her husband, 
Randy, runs Adarand Constructors, the plaintiff in the Adarand cases. 
She provided the subcommittee with a firsthand look at how this program 
has operated in practice and the impact it has had on their business.
  She testified how this program has caused their firm to lose several 
contracts, despite being the low bidder on

[[Page S1406]]

the job. She has also testified that the beneficiaries of this program, 
which is purportedly targeted at disadvantaged business entities, are, 
in fact, well-established firms. It has already been noted on the floor 
of this Senate that most of the time those firms, when they win a 
contract, win it based on the fact that they are the low bidders, but 
when they are involved in this kind of contract for federally related 
tasks, they do not even have to be the low bidder.
  I think it should be said that the general public of the country does 
not want to spend its money if it is not really helping someone who is 
needy, but just helping someone who is a part of a broad category to 
get a job which they don't earn by being the best in the competition. 
The American way is not to award the prize to the one who has this race 
or that race, or has this disadvantage or that disadvantage by the law. 
The American system has been to reward achievement and merit. This is a 
fundamental value of our culture. It is also reflected in our 
Constitution, and it was reinforced in the Adarand case, both at the 
Supreme Court level and on the remand. This is not the only set of 
cases that has decided this.

  As a matter of fact, it has been represented on the floor that there 
has been no other case in which this has been decided. But I think, if 
not directly on point at least so similar that one could not ignore it, 
is the case of Houston Contractors Association v. The Metropolitan 
Transit Authority of Harris County. In that instance, it was another 
U.S. Federal district court which ruled, consistent with the U.S. 
Supreme Court, that such set-asides and quotas and preferences as are 
contained in the ISTEA bill are simply wrong. Those courts, I believe, 
would provide more than an adequate basis; they would provide a 
compelling argument that we adopt the amendment as propounded and 
proposed by the Senator from Kentucky.
  The two Adarand decisions make plain the unconstitutionality of the 
ISTEA set-asides. But removing this provision from the bill as 
unconstitutional should be an easy decision for Congress for a second 
reason--the program uses race for a plainly impermissible end. The 
Constitution obligates the Congress to reject unconstitutional 
legislation whether or not the courts have, as here, already held the 
legislation unconstitutional. Wholly apart from the conclusions of the 
two Adarand courts, it is obvious that the ISTEA set-asides use racial 
classifications in an impermissible way.
  Reasonable persons can differ as to whether the Constitution forbids 
the Government from using race as a factor in rectifying past racial 
discrimination. You might have a different situation if you were saying 
the statute set up a presumption that there had been racial 
discrimination and then used race as the basis for rectifying that 
racial discrimination. That is not what the Disadvantaged Business 
Enterprise Program does.
  As its name suggests, the Disadvantaged Business Enterprise Program 
seeks to assure that a certain percentage of Government contracting 
dollars flow to--and here are the words--``socially and economically 
disadvantaged individuals.''
  The statute then defines a disadvantaged business enterprise as any 
business owned by members of certain ethnic groups and, since 1987, 
businesses owned by women of any race.
  In the statute, you say that you are trying to correct the problem, 
which is social and economic, and then you get to the remedy, and the 
remedy that is proposed is not based on social concerns, it is not 
based on economics; it is based on race.
  The truth of the matter is that the Supreme Court says you have to 
narrowly tailor the remedy and focus the remedy on the problem, but 
here the statute says that there is a problem that is social and 
economic but then has a solution which is racial. Obviously, the 
district court even saw the humor of the lack of fit between problem 
and remedy. So far does the racial remedy miss the social and economic 
problem that it would allow the Sultan of Brunei, one of the richest 
people in the world, to be presumed socially and economically 
disadvantaged.
  It is clear, you do not have to have a Supreme Court ruling, you do 
not have to have the district court rulings, you do not have to have a 
second district court ruling in the State of Texas to tell you this. I 
don't think you have to be a rocket scientist or law school professor. 
If the problem is social and economic and your solutions should be 
narrowly tailored, the solution should be social and economic. It 
should be focused on the problem. But instead of this statute focusing 
the solution on the problem of social and economic disadvantage, it 
focuses the solution on race, which wasn't something that was mentioned 
as the problem to begin with.
  The notion that every small business owned by racial minorities is 
somehow economically disadvantaged is nonsense. It flies in the face of 
reality. As a matter of fact, it is an affront to many of the 
businesses owned by racial minorities or women in this country. Many 
are very successful. For us to presume that because a black person or a 
Hispanic person or an Asian person owns a business it is disadvantaged 
or it is economically failing is for us to engage in rank prejudice, in 
my mind.

  I cannot imagine going up to someone and saying, ``I see that your 
computer business is disadvantaged, it's economically failing, it needs 
Government assistance, you are a charity case.''
  ``Why?''
  ``Because your race is a minority race.''
  That is un-American to me. It would be an affront to me if I were 
told that in spite of my balance sheet, in spite of my portfolio, in 
spite of the fact that we had orders backlogged, we couldn't supply the 
demand, in spite of the fact our profits were up, we were still 
economically and socially disadvantaged just because of the way we were 
born, the color of our skin. That is an affront to the dignity of the 
individuals that this law apparently hopes to protect.
  I simply could not in good conscience go to my fellow Americans and 
say, ``Well, your bottom line may show that you are successful and your 
stock may be worth millions and you may be getting lots of contracts 
and you may be beating everybody else in your business, but you're a 
failure because of your race,'' or ``you are disadvantaged because of 
your race.'' That is something that we should not do as a country. 
Government should not go to people and say, ``We're going to presume 
you're a failure, we are going to presume you economically can't make 
it, that you are socially disadvantaged because you are of a certain 
race or a certain ethnic minority.''
  I can't believe that. Why should we suggest that? We have seen time 
and time again, and we see it more and more frequently, people without 
regard to race, because of this economy. The economy of America doesn't 
make decisions based on race--look how many of the role models that are 
used in selling products all across this country are people of a wide 
variety of racial and ethnic backgrounds. Some of the most valuable 
endorsements in America are endorsements from people who, according to 
this law, would be socially and economically disadvantaged because of 
race. I would hate to tell some of those people they were 
disadvantaged. They might take out their wallet and buy me on the spot. 
They might buy everything that I own, and they could probably do it out 
of petty cash.
  I think the day has passed when we as a nation should try to tell 
people because they are of a particular race that they have an economic 
or social disadvantage, when it is pretty clear, when the facts of the 
matter just might be incontrovertible that they are not disadvantaged.
  At the hearing we held in the Constitution Subcommittee, a number of 
witnesses testified concerning the unconstitutionality of these set-
asides and the futility of the Clinton administration's efforts to 
implement this flawed program and to continue to tell people that based 
on race alone they are somehow economically disadvantaged or 
unsuccessful. For example, Professor George LaNoue, of the University 
of Maryland, provided a detailed account of how the administration has 
failed to conduct the kind of detailed statistical analysis necessary 
to justify a race-based program. There is no evidence of how specific 
groups have been the subject of particular acts of discrimination and 
how the program is tailored to address these instances of 
discrimination. Thus, according to Professor LaNoue, there is no 
compelling

[[Page S1407]]

interest to justify the use of race as a proxy or as a way of defining 
remedy in this context.
  Other constitutional scholars focused on the critical lack of narrow 
tailoring in this statute. As Professor Eugene Volokh of the UCLA law 
school stated:

       The statute as now written . . . is not something that can 
     be saved through any regulations. It seems to be fatally 
     overinclusive, and that strikes me as an easy case that it is 
     not narrowly tailored.

  Easy case.
  Professor Volokh's testimony reflects the fact that the Constitution 
allows the Federal Government to use race as a factor only in the 
rarest of circumstances and only with surgical precision. Well, 
surgical precision would probably have lopped off the Sultan of Brunei, 
I might say.
  As the constitutional scholars on our panel concluded, the race-based 
set-asides in this bill are not drafted with sufficient precision or 
supported with enough statistical evidence to survive constitutional 
scrutiny.
  I ask unanimous consent to have printed in the Record an excerpt of 
the written testimony of Professor LaNoue and the full written 
testimony of Professor Volokh.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

The Compelling Interest Basis for the Use of Race and Ethnic Conscious 
   Means in the U.S. DOT Proposed Regulations for Modifying its DBE 
                          Program: An Analysis

  (Excerpts of testimony before the Subcommittee on the Constitution, 
 Federalism and Property Rights of the Committee on the Judiciary U.S. 
  Senate by George R. La Noue, Professor of Political Science, Policy 
Sciences Graduate Program, University of Maryland Baltimore County, and 
University of Maryland Graduate School Baltimore; Director, Project on 
  Civil Rights and Public Contracts (Phone 410-455-2180); (Currently 
  Visiting Scholar, Institute for Governmental Studies, University of 
     California Berkeley) (Phone-510-527-6088), September 30, 1997)

       Criticisms of the Administration's failure to produce 
     information necessary to support a compelling interest or 
     narrow tailoring with regard to the use of racial and ethnic 
     preferences in federal procurement programs.
       Despite the fact that more than two years have passed since 
     the Supreme's Court's decision in Adarand v. Pena, and 
     despite the fact that the Justice Department and other 
     federal agencies have devoted a considerable amount of their 
     formidable resources to responding to Adarand, the federal 
     government still have not produced:
       1. Any findings about whether there has been any 
     discrimination by any federal agency in the contemporary 
     procurement process.
       2. Any findings about whether any state DOT agency or any 
     other state agency has discriminated in the award of federal 
     contract dollars.
       3. Any findings about whether there has been any 
     underutilization of qualified, willing and able MBE 
     contractors in federal procurement or federally assisted 
     procurement as prime contractors or subcontractors. The 
     federal government has completed no disparity study that 
     could create the ``proper findings'' the judiciary requires 
     of governments before they employ race conscious measures.
       4. Any findings about whether, when MBEs bid on contracts, 
     they are proportionately successful. No study or who bids on 
     federal contracts has been released.
       5. Any statistical analysis of whether the particular 
     racial and ethnic groups granted presumptive eligibility are 
     in fact disadvantaged because of patterns of deliberate 
     exclusion or discrimination in recent years.
       6. Any evaluation of the effectiveness of existing federal 
     race neutral programs or the possibility of creating new 
     ones.
       7. On May 23, 1996, the Justice Department proposed 
     ``benchmark limits'' for each industry which were intended to 
     represent the ``level of minority contracting that one would 
     reasonably expect to find in a market absent discrimination 
     or its effects.'' and to control the decision of whether race 
     conscious means were necessary in federal procurement related 
     to that industry. (61 Fed. Reg. 26042, 26045, 1996). These 
     benchmark limits still have not been produced. (``Response to 
     Comments to Justice Departments Proposed Reforms to 
     Affirmative action in Federal Procurement,'' 62 Fed. Reg. 
     25650. 1997) The Department apparently thought such benchmark 
     limits were essential to narrow tailoring and stated: 
     ``Application of the benchmark limits ensures that any 
     reliance on race is closely tied to the best available 
     analysis of the relative capacity of minority firms to 
     perform the work in question--or what their capacity would be 
     in the absence of discrimination.'' (61 Fed. Reg. 26042, 
     26049, 1996).
       Given this premise, the failure to develop the benchmark 
     limits suggests federal goals are not narrowly tailored.
                                                                    ____


 Testimony Before the Subcommittee on the Constitution, Federalism and 
     Property Rights of the U.S. Senate Committee on the judiciary

      (By Eugene Volokh, Acting Professor of Law, UCLA Law School)


                    1. The ISTEA is Unconstitutional

       There are hard cases and easy cases under the Supreme 
     Court's race discrimination jurisprudence. This is a pretty 
     easy case.
       To be constitutional, a racially discriminatory program 
     must be narrowly tailored to a compelling state interest. The 
     ISTEA is not narrowly tailored in at least four ways:
       A. Overinclusiveness. I know of no evidence that, say, 
     South Asians or Cuban-Americans, or Spanish-Americans, or 
     East Asians are currently suffering from massive race 
     discrimination or the legacy of past discrimination. 
     Doubtless there's some discrimination against these groups, 
     just as there's some against Jews (my own ethnic group), 
     Italians, Irish, and others. But there's no evidence that 
     there's anywhere near enough discrimination to justify 
     preferences for these favored groups, or to explain why 
     Afghans, who are not seen as South Asians, should be treated 
     differently from Pakistanis, who are.\1\
---------------------------------------------------------------------------
     \1\ Footnotes at end of article.
---------------------------------------------------------------------------
       This alone makes the ISTEA unconstitutional under the 
     Court's decision in City of Richmond v. J.A. Croson Co.,\2\ 
     and unconstitutional in a way that no regulations can fix, 
     because the statute itself contains the impermissible 
     classifications and the regulations must remain consistent 
     with the statute.
       B. Mismatch between the alleged discrimination and the 
     remedy. ``Narrow tailoring'' means that the racial 
     classification must closely fit the government's interest in 
     remedying discrimination; but the remedy here simply doesn't 
     correspond to the alleged discriminatory conduct.
       Consider, for instance, the supposed lending discrimination 
     against minority-owned businesses. If indeed lenders are 
     refusing to lend to qualified minority businesses, the 
     narrowly tailored remedy is to prevent or compensate for this 
     refusal: For instance, to set up a corporation that will lend 
     to all qualified businesses that have been passed over by 
     other lenders. In fact, if these businesses are really 
     qualified, then there's money to be made doing this; the 
     remedy can thus even be self-funding.
       But the statute doesn't contain any narrowly-tailored 
     remedy like this. Instead, it provides a set-aside to all 
     minority-owned businesses, whether or not they have suffered 
     from discrimination in lending, with absolutely no program 
     that specifically addresses the supposedly grave problem of 
     lending discrimination.
       In fact, the statute's ``remedy'' here is actually 
     perverse, helping those who seem to need help least. Those 
     businesses that benefit from the set-aside are the ones that 
     ultimately did get the loans they needed. Those that suffered 
     most, that couldn't get the loans, are out of business and 
     aren't helped by the set-aside at all.
       C. The need for a race-neutral alternative. The lending 
     example would also be a race-neutral remedy--it would help 
     all businesses that were unfairly denied funding, regardless 
     of their owners' race. The Court has clearly said that race-
     based remedies are allowed only when race-neutral 
     alternatives are unavailable.\3\ But the statute imposes a 
     set-aside that's required regardless of the availability of 
     race-neutral solutions.
       D. The need for geographical tailoring. Different parts of 
     the country have wildly different ethnic compositions. 
     Hawaii, which is majority non-white, is a very different 
     place from Maine, and you'd expect very different levels of 
     minority participation in each state's contracting industry.
       Likewise, different parts of the country have different 
     levels of participation by women in contracting, and 
     different levels of ethnic discrimination against different 
     ethnic groups. Having a uniform set-aside throughout the 
     country, regardless of all these factors, is the opposite of 
     narrow tailoring.
       This is a somewhat controversial point; for instance, the 
     Adarand trial court has taken a different view.\4\ Still it 
     seems to make common sense. If contracting discrimination 
     against minorities in one state is largely eradicated--or if 
     the paucity of minority contractors in that state is caused 
     by the small minority population in the state--then it's 
     wrong to discriminate against whites there just because 
     substantial discrimination against minorities continues 
     elsewhere. Congress is quite right to try to create 
     nationwide remedies, but ``narrow tailoring'' consists of 
     creating nationwide remedies that are tailored to local 
     conditions, not remedies that treat the entire country as one 
     undifferentiated mass.
       Perhaps someone can propose some statutory changes that 
     will make ISTEA's race preference program constitutional. I 
     doubt that this is possible, but one can't know until one 
     sees the specific proposal. But in its current form ISTEA is 
     clearly invalid.


                  2. Congress's Constitutional Duties

       In Adarand Constructors, Inc. v. Pena,\5\ the Court held 
     that race classifications must pass strict scrutiny. This 
     means that the Court will strictly scrutinize them, but it 
     also means that Congress must strictly scrutinize them, too. 
     Before Congress enacts any racially discriminatory program, 
     Congress itself must verify that the program is indeed 
     narrowly tailored to a compelling state interest.

[[Page S1408]]

       This is especially so because the Court has suggested that 
     it may in some measure defer to Congress's factual findings. 
     Though the Court never abandons its own duty to independently 
     review the facts, it acknowledges Congress's factfinding 
     capabilities, and thus listens carefully to Congress's 
     judgments.
       This deference, then, would mean that the Court is trusting 
     Congress to do the right thing: To look at the facts 
     carefully and skeptically, and to make sure that race 
     preferences aren't just politically convenient or seemingly 
     useful, but genuinely and ineluctably necessary. Congress's 
     solemn constitutional obligation would thus be made even 
     graver by the fact that a coordinate branch is relying on 
     Congress's faithful discharge of its duties.


                          3. A practical note

       So far, I have made two rather technical legal points; I'd 
     like to briefly step back and make a more practical one.
       People on both sides of this debate share a common goal: To 
     eliminate discrimination. That's why the government properly 
     demands that contractors not discriminate. But under ISTEA, 
     the government in the same breath tells the Adarand 
     Constructors of the world: ``While we're demanding that you 
     not discriminate--while we're telling you that race 
     discrimination is a horrible evil--we're at the same time 
     proudly discriminating against you because of your race. You 
     must never treat an employee or a subcontractor worse than 
     another because he's black or Hispanic or Asian. But we are 
     treating you worse than others because you're white.''
       Is that fair? And will it really work towards our shared 
     goal of ending discrimination? It seems to me the answer to 
     both these question is ``no.''


                               footnotes

     \1\ In theory, the presumption of social disadvantage is 
     rebuttable--but mostly in theory. In practice, neither the 
     federal government nor state grant recipients have a duty to 
     investigate whether a supposedly ``disadvantaged'' minority 
     is indeed disadvantaged. Adarand Constructors v. Pena 965 F. 
     Supp. 1556, 1565 (D. Colo. 1997). In fact, state grant 
     recipients are required to presume disadvantage until a third 
     party comes forward with contrary evidence. 49 C.F.R. pt. 23, 
     subpt. D, app. A.
     Moreover, while members of favored racial groups get the 
     benefit of the presumption, members of other groups who are 
     also socially disadvantaged have to show this disadvantage by 
     clear and convincing evidence--a far higher standard than the 
     conventional ``preponderance of the evidence.'' 13 C.F.R. 
     Sec. 124.105(c).
     The deck is thus stacked very much in the direction of 
     treating the racial presumption as being essentially 
     dispositive.
     \2\ 488 U.S. 469, 506 (1989).
     \3\ Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 237-38 
     (1995); Croson, 488 U.S. at 507.
     \4\ Adarand Constructors, Inc. v. Pena, 965 F. Supp. 1556, 
     1573 (D. Colo. 1997).
     \5\ 115 S. Ct. 2097 (1995).

  Mr. ASHCROFT. Mr. President, the Constitution gives the Congress an 
important duty in upholding the Constitution. The oath we take to 
uphold the Constitution gives us an obligation to vote against 
unconstitutional laws. The hearing I held in the Constitution 
Subcommittee convinced me that this is clearly one of those 
unconstitutional provisions that should be removed from the statute.
  I yield the floor.
  Mr. McCONNELL. Mr. President, can I say very briefly to the Senator 
from Missouri how much I appreciate his fine addition to this debate 
and how grateful I am for his leadership on this important issue, as 
well as the distinguished Senator from Alabama, the current occupant of 
the Chair. They both understand the issue well and make an important 
contribution to the debate.
  The PRESIDING OFFICER. Under the previous order, the Senator from 
Massachusetts is recognized.
  Mr. KERRY. Mr. President, I yield myself, with the permission of the 
manager, such time as I may use.
  I have listened carefully now to a number of the arguments for the 
amendment of the Senator from Kentucky, and I am confident that a good 
many of my colleagues will join me in adamantly opposing this amendment 
and, most important, the arguments and the approach that underlie it. 
This is a very, very significant debate for the Senate, and it is the 
first very significant confrontation, though it will probably--not 
probably, certainly--not be the last on the issue of race.
  This is a fundamental challenge to an effort that this country has 
undertaken to make real the promises of our Founding Fathers and the 
fundamental values of our Nation: economic opportunity, equal 
opportunity, a chance to be able to share in the remarkable assets of 
our Nation.
  I listened carefully to the Senator from Missouri, and one phrase in 
particular in his comments that he kept repeating was that the economy 
of America doesn't make decisions based on race; let me repeat, the 
economy of America doesn't make decisions based on race.
  First of all, I respectfully submit to my friend from Missouri, the 
economy, per se, doesn't make the decisions; people make the decisions, 
people within the economy, CEOs of companies, boards of directors, 
shareholders, whole companies, individual employers, wholly owned 
subsidiaries. But it is individuals, it is the bosses who hire, it is 
the individuals who commit a company to a particular direction.
  The fact is that individuals in America discriminate. Even in 1998 
they discriminate, and anybody who believes that there is not 
sufficient level of discrimination with respect to women-owned 
businesses and minority-owned businesses, minorities themselves or 
women themselves within the marketplace is not looking at the 
statistics, is not looking at the cases, is not looking at the evidence 
which clearly documents the existence of that discrimination. I will 
say more about that in a minute, Mr. President.
  There are three fundamental reasons why we should not accept the 
amendment of the Senator from Kentucky. Reason No. 1 is the program for 
disadvantaged business enterprises, the DBE Program, is constitutional. 
It will pass constitutional muster, contrary to the arguments that are 
being set forth.
  Secondly, because of the discrimination that I have just broadly 
pointed to, it is necessary.
  And thirdly, Mr. President, it works; it works brilliantly. There is 
no reason that we should take a program which already reaches out to a 
very small group of disadvantaged people and broaden the definitions so 
as to give more of the very little that goes to the disadvantaged to 
the vast majority who are already getting the vast majority of what the 
Federal Government expends in its programs.
  I might add, there is, indeed, a compelling interest in the Federal 
Government making this kind of choice about how the Federal Government 
will expend Federal dollars.
  Mr. President, let me point out, first of all, this is not a quota. 
It is a set-aside of a specific amount of money, but there is no 
specific direction as to who gets that amount of money. There is no 
quota of numbers of women, no quotas of numbers of particular races. It 
is open to any disadvantaged business enterprise.
  And while we set aside a very specific sum of money, we do not 
allocate it with specificity. We set a national goal. And it is 
appropriate in this country to set national goals for what we will do 
to try to break down the walls of discrimination, the barriers against 
equal opportunity, in order to give people an opportunity to share in 
the full breadth of the upside of the economy of our Nation.
  Mr. President, this goal is renegotiated annually. And it has worked 
very well to encourage disadvantaged business participation in these 
contracts. I add, most States have exceeded the 10 percent goal, but 
there is flexibility where it is needed. And existing law authorizes 
the Secretary of Transportation to lower that goal in order to respond 
to local conditions.
  So when my colleague says that there has to be a level of 
flexibility, and it has to be narrowly defined, I respectfully suggest 
that part of that narrowness is met by the fact that the Secretary of 
Transportation has the ability to lower that goal under very clear 
circumstances.
  I point out to my colleagues that since this program began, first as 
an administrative initiative in the late 1970s, and later by statute in 
1982, it has been an extraordinarily successful tool for leveling the 
playing field in Government contracting and for remedying racial and 
sex discrimination, which still persist.
  I add to my colleagues, where you have a showing of clear cases or a 
history or a pattern or instances of this kind of discrimination, we 
have an affirmative obligation, both a statutory one and a moral one, 
to make certain that we are going to do something very specific to 
respond to that kind of discrimination. And, as I will show, the 
evidence is so overwhelming as to what happens when you do not have it, 
that it is clear why there is a compelling interest for the Government 
to put this kind of effort into place.
  Many of the firms that have been able to use the program, the women-

[[Page S1409]]

owned firms or minority-owned businesses, literally would have been 
excluded from doing so altogether were it not for the DBE program. And 
it is not, as my colleague from Missouri said--he kept saying that 
since we set up this kind of goal, some people of race believe that 
they are at a disadvantage because of their race. Ask people who 
participate in the program. There are countless people who will tell 
you they never believed they were disadvantaged. They do not think they 
are disadvantaged today. And, in fact, it is only because of the 
existence of the program that they have been able to prove to people 
that not only do they not believe they are disadvantaged, but they are 
not because they can perform equally as well as any majority firm. And 
that, in fact, has been a record which has prompted many States to come 
back and be extraordinarily supportive of the program.
  In 1996, I am pleased to say, Massachusetts exceeded its goal of 
providing 11 percent of the Federally assisted highway dollars to DBEs 
by providing about 13.6 percent in total to DBEs. And I add, in one 
multi-year project alone, Massachusetts provided 147 women-owned 
businesses and 227 minority-owned businesses with an aggregate amount 
of some $500 million of contracts. And the program has been an enormous 
success and very well received, Mr. President.
  So, let me look at the constitutional issue for a moment, if I may.
  Contrary to the arguments of the Senator from Missouri, and others, I 
believe that a careful examination of the Adarand case will show that 
the Court made it very clear that ``strict scrutiny,'' as he said, is 
the appropriate constitutional review standard. But that means that you 
then look to the ``compelling State interest'' and to the ``narrowly 
tailored'' definition in order to see whether or not it will pass 
muster.

  Unfortunately, Mr. President, as I mentioned earlier, there are just 
countless examples across the country of what happens when you do not 
have this kind of effort. Although minorities make up over 20 percent 
of the population, minority-owned firms constitute only 9 percent of 
all U.S. construction firms, and a mere 5 percent of Federal 
construction receipts.
  So you can see the sort of downward curve between total levels of 
population, levels of construction, and then levels of receipts with 
respect to the outlays by the United States to those firms.
  Women own approximately 9.2 percent of the Nation's construction 
firms, but according to the Urban Institute's recent study, their 
companies earn only half of what is earned by their male-owned 
counterparts.
  Now, let us look at this question of ``narrowly tailored,'' Mr. 
President.
  The DBE program is a very flexibly defined program. It allows for 
each State to respond to local conditions. And, by definition, by 
allowing each State to respond to the needs of that State, it becomes 
very narrowly tailored. In the implementation, the DBE program has 
authority to waive the DBE goal. It can waive it completely where it is 
not possible to achieve the goal in a particular contract or for a 
given year.
  In addition, the Department of Transportation recently proposed 
regulations to modify the program even further so as to help with 
compliance with the Adarand test. So you cannot come to the floor of 
the Senate and measure the program exclusively by what might have been 
in place several years ago, since already proposed are a set of 
requirements that respond very specifically to the requirements of the 
Adarand test.
  In fact, the Department of Transportation has received over 300 
public comments in response to the proposed rules. And the States that 
commented on the rules overwhelmingly supported the Federal DBE 
program.
  Let me call the Senate's attention to the specific regulatory changes 
which deal with this question of ``narrowly tailored'' and of 
``flexibility,'' and which clearly bring it within constitutional 
muster.
  First of all, the Department of Transportation is building even more 
flexibility into the program by setting goals that reflect the 
availability and the capacity of DBEs in a given market. And the 
contract recipients will be allowed greater flexibility to consider 
local circumstances in formulating their plans to achieve DBE 
participation.
  Second, states and localities implementing the DBE program will be 
directed to use race neutral--let me emphasize this. The Senator from 
Missouri kept saying the decision will be made on the basis of race. In 
fact, there are specific race-neutral aspects to the program, such as 
outreach, training, technical assistance, and simplifying bonding or 
surety costs in the bid preparation. And those are used in order to 
achieve as broad a DBE participation as possible before any race-based 
aspect of the program is used. So the race-based aspect is pushed way 
down to the bottom of the list of criteria--only if you cannot satisfy 
the goals by virtue of those original considerations.
  Third, the new regulations will reinforce existing provisions to 
ensure that firms owned by wealthy individuals are not certified as 
DBEs and to clarify that non-minority individuals who have suffered 
discrimination can be certified as DBE owners and become eligible to 
receive the same program benefits as minority-owned DBEs.
  Now, I do not see how anybody, examining those three regulatory 
changes as a consequence of the Adarand decision, could say that that 
is not a legitimate effort to meet the standards of ``narrowly 
tailored'' and of ``flexibility.''
  Mr. President, let me turn to the question of ``compelling interest'' 
and of ``need.'' Because in addition to being constitutional on its 
face, it is my judgment that only at peril could you turn your back on 
the reality of what has happened in many parts of our country.

  In some States, the State DBE goals were repealed. So let us look at 
what happened where they were repealed, Mr. President. Was it a neutral 
reaction? No. Was it a marginal reaction? No. In point of fact, it was 
a draconian step backwards. Without a State goal for DBEs, the 
contracts to women-owned and minority-owned construction businesses in 
a number of different States plummeted.
  We see prime contractors that use DBEs on Federally-assisted 
construction projects which had DBE goals often excluded DBE goals on 
State projects where there were no State goals. So in other words, you 
could have a company come in and they would be adhering to the Federal 
standards, but where there was no State goal they made absolutely no 
effort whatsoever in order to try to reach out to a disadvantaged 
businesses in their State-sponsored contracts.
  In Michigan, just to take one example, within 9 months of ending the 
State DBE program, minority-owned businesses were completely shut out 
of the State highway construction projects. They received no contracts 
at all. By 1996, there was a tiny rebound to 1.1 percent, representing 
only 31 subcontracts. This compared to Michigan's Federal DBE 
participation of 554 subcontracts worth 12.7 percent. That is the 
difference, Mr. President--12.7 percent versus first none--zero; then 
creeping up to 1.1 percent.
  Louisiana experienced a similar disparity between Federal DBE 
participation, where the 1996 DBE negotiated goal was 10 percent, and 
State participation where there was no State DBE program. In Federally 
assisted projects, disadvantaged women-owned and minority-owned 
contractors received 160 prime and subcontracts worth 12.4 percent of 
Louisiana's Federal contract dollars, compared to a State participation 
in a mere two prime contracts and 12 subcontracts. That was worth only 
.4 percent of the State highway construction dollars.
  In Hillsborough County, FL, awards to minority-owned contractors fell 
by 99 percent--99 percent--after the minority contracting program was 
ended.
  In San Jose, CA, suspension of the city's minority contracting 
program in 1989 resulted in a decrease of more than 80 percent in 
minority business participation in the city's prime contracts.
  Now, I ask my colleagues, is that just the economy of our country 
speaking, an economy at one moment that is capable of having 12 percent 
and at another moment, where they lose the incentive to do it, to drop 
down to zero, to drop down by 99 percent, to drop down by 80 percent, 
to have .4 percent at the State level while at the Federal level there 
are 12 percent? You could

[[Page S1410]]

not have a more compelling interest if you tried, for understanding why 
it is that in this country we need to continue to break down those 
barriers of resistance. And there is nothing compelling in the proposal 
to take away from that marginal percentage and give it to those 
majority contracts and contractors who already are getting the lion's 
share of what we expend for transit and highway construction at the 
Federal level in this Nation.
  Mr. President, as the Ranking Member of the Small Business Committee, 
I find two aspects of this McConnell amendment particularly troubling.
  First, the amendment expands the definition of who is eligible for 
help to include the vast majority of construction firms. Now, I am in 
favor of helping small businesses. We have done a lot in the Small 
Business Committee to make sure that they are helped. As a group, they 
ought to receive a greater percentage of Federal contract 
opportunities. And I want them to. All of the growth in our economy 
comes from small businesses. In fact, I cosponsored a bill with 
Chairman Bond last year that raised the small business Federal 
contracting goal from 20 percent to 23 percent.
  But this program is intended to help level the playing field for 
businesses owned by individuals that have historically suffered racial, 
ethnic or sex discrimination in Federal construction contracting and 
that continue to suffer that kind of discrimination. It helps women-
owned businesses, minority-owned businesses, and majority-owned 
businesses that have suffered discrimination. They receive about 15 
percent of the Department of Transportation-assisted contract dollars.

  Mr. President, the other 85 percent still goes to nondisadvantaged 
majority-owned companies. To increase the assistance to that universe 
of businesses that, according to the Federal Procurement Data Center, 
now receive 62 percent of contracts above $25,000, and a higher 
percentage of those below, would dilute the very salutary effects of 
the program on companies owned by truly disadvantaged individuals.
  Second, and finally, the amendment proposes that the Senate 
substitute requirements for outreach compilations and directories of 
assistance and surveys of existing emerging businesses for the national 
DBE goal and the current DBE program. The proposed substitute program 
will be expensive to implement because of the detailed requirements for 
compilation and directories and the frequency with which updates have 
to be performed.
  In addition to being expensive to implement, much of what is proposed 
as the substitute for the DBE program is simply duplicative of aspects 
of the existing DBE program and many of the Small Business 
Administration's programs that are already in place. Each year, the SBA 
provides outreach, training, technical, bonding, and surety assistance 
to thousands of Federal contractors through a wide variety of programs. 
Those programs include the SBA's procurement center representatives, 
its more than 950 Small Business Development Centers, its Women's 
Business Centers, and assistance provided through the procurement and 
minority small business staff in SBA's network of 69 offices throughout 
the country. It is hardly necessary to duplicate that or to come at it 
with some kind of add-on program.
  Mr. President, time has shown that the DBE program works. It is a 
program that meets constitutional muster. It is a program that has a 
rational, national compelling interest. I hope that my colleagues will 
not undo what has proven to be of enormous benefit to countless 
minority- and women-owned businesses in the country. Thank you, Mr. 
President.
  The PRESIDING OFFICER. The Senator from Minnesota.
  Mr. WELLSTONE. I said to my colleague from Utah I will take less than 
5 minutes.
  The PRESIDING OFFICER. Who yields?
  Mr. BAUCUS. Mr. President, I yield 5 minutes to the distinguished 
Senator from Minnesota.
  Mr. WELLSTONE. Mr. President, I will keep it very simple. As a 
Senator from Minnesota, I rise in strong support of this Disadvantaged 
Business Enterprise Program, what we are calling the DBE program. For 
people who are watching, if you didn't catch it, it is Disadvantaged 
Business Enterprise Program.
  This program sets out a goal of 10 percent of the highway 
construction funds. The attempt is to make sure that 10 percent of 
these funds go to disadvantaged businesses, and the focus is on 
``minority businesses'' and businesses owned by women.
  My State of Minnesota has essentially had the equivalent of this 
program since 1980. One of the reasons I am really proud of being a 
Senator from Minnesota is I think we have a really strong, progressive, 
justice tradition. In the last 5 years, Minnesota Department of 
Transportation has exceeded the 10 percent goal. We have been between 
about 11 and 13 percent for contracts that have gone out to 
``minority''-owned businesses and to women-owned businesses.
  Mr. President, the important point to make for colleagues is that 
these businesses have been able to win these contracts because of a 
level playing field. It has enabled them to get their foot in the door. 
They haven't been able to obtain these contracts because they have a 
bid that comes in higher than other contractors. Other things have to 
be equal. They don't get these contracts because they do shoddy work. 
It is because these are effective businesses that do good work. What 
you have is a situation where around the country we have made the 
argument through this Disadvantage Business Enterprise Program, we are 
serious about entrepreneurship.

  We think it is indeed better that the people who make the capital 
investment decisions in the communities we live in are people who own 
businesses and live in those communities, not people who make decisions 
over martinis halfway across the world. We are not talking about big 
multinational corporations.
  Insofar as we are focused on our local economies and insofar as we 
are talking about entrepreneurship, I will tell you, as a member of the 
Small Business Committee, I have loved working on these issues. I am 
not ashamed to say that small businesses have been my teachers. I was a 
teacher, a college teacher. I never owned a small business, and I have 
learned a lot about what it takes to do so. But it is absolutely true 
that most of the growth in our economy is in the small business sector.
  It is absolutely true that if we want to expand opportunities and if 
we don't want to turn our gaze away from an unpleasant reality, which 
is that we still have discrimination in our country--does anybody 
believe that America is blind to issues of race? Does anybody believe 
that we have conquered all of this? Does anybody believe that we don't 
want to try and redress some major historical grievances? That is what 
we are doing through this program.
  It does just what the title says--it is the disadvantaged business 
enterprise program. It sets a goal of 10 percent of highway money going 
to these contractors which are owned by minorities and women. It has 
been enormously successful in the State of Minnesota. We exceed that 
goal. It enables people to get their foot in the door, start their 
businesses, and then they become successful in a whole lot of other 
areas as well.
  I think then you have this kind of marriage between, on the one hand, 
trying to expand opportunity, on the other hand trying to correct a 
historical injustice, and--although there are only two hands--on the 
third hand, also being serious about promoting entrepreneurship, also 
being serious about making sure that women and people of color in our 
communities are able to obtain some of the funding that comes out of 
these contracts.
  Instead, it will be a close vote. I hope we win. I think we should 
win. I do not believe that the U.S. Senate ought to be turning the 
clock back 30 years. I think we should be moving forward. I think a 
vote which would eliminate this program, the DBE program, would be an 
enormous step not forward for expanding opportunities, not forward for 
promoting entrepreneurship, not forward for women and minorities having 
these opportunities, it would be a giant leap backward.
  That is why I come to the floor to speak in behalf of this program.
  Mr. McCONNELL. Mr. President, I yield the distinguished Senator from 
Utah such time as he may need.

[[Page S1411]]

  Mr. HATCH. I thank my colleague.
  Over thirty years ago, the U.S. Senate passed the Civil Rights Act of 
1964. It was historic legislation, and its supporters showed great 
moral courage in seeing it through.
  The principle underlying that Act was equal treatment: The federal 
government should treat all persons equally, regardless of their race, 
color, national origin or sex. Indeed, it should mandate equal 
treatment from employers, labor unions, providers of public 
accommodation as well as many others.
  Now, Contrary to popular mythology, however, the Senate was not ahead 
of the moral curve when it passed the 1964 Act. Polls taken at the time 
show that a majority of Americans supported the legislation. Indeed, 
they continue to support it. They know that its principle is 
fundamental. The United States government has no business making 
distinctions based on skin color or sex. Period.
  But there were many vocal opponents too. It is important to give 
credit to the members of the Senate who resisted those opponents by 
passing the legislation.
  Somewhere over the course of the last generation, the federal 
government started to fall away from the 1964 Act's fundamental 
principle. In the name of ``affirmative action,'' is substituted a 
policy of preference based on race and sex for the policy of equal 
treatment. And that is why the term ``affirmative action'' sometimes 
has a bad connotation. The fact is, affirmative action calls for 
outreach, job training, education--those type of things I think 
everybody is for, and certainly I am for.

  I have no doubt that the supporters of preferences were--and still 
are--well meaning. They wanted to do something about this country's 
very real history of racial and gender inequity. But the policy they 
created stood the color- and gender-blind principle of the 1964 Civil 
Rights Act on its head.
  I believe that it was a serious error to compromise one of our most 
fundamental principles. Despite assurances from preference supporters 
that these programs will be only temporary--lasting for a few years at 
most--preference programs now permeate the Federal Government. Rather 
than withering away, they are showing a remarkable tendency to expand. 
New programs are added. New groups demand to be included. Under one 
program, preferences are now available to no less than forty ethnic 
groups.
  Each time such an expansion occurs, we become less like the color- 
and gender-blind country that we aspire to be and more like those 
countries where an ethnic spoils system has been a way of life for 
centuries.
  Who would have thought it would be so difficult for the Federal 
Government to reclaim the moral high ground? The public has never 
supported preferences. They have been demanding a return to equal 
treatment since preferences were first implemented. But the Federal 
Government's decision to compromise its principles has proven to be 
habit forming. Despite the public's support for a return to equal 
treatment, many of our Nation's leaders have refused to stand up for 
principle.
  Even the most indefensible programs are tough to eliminate. ISTEA 
mandates that ``not less than 10 percent'' of Federal highways and 
transit funds be allocated to ``disadvantaged business enterprises,'' 
which firms owned by designated minority groups are presumed to be. It 
is a set-aside, pure and simple.
  Now, I might add here that these so-called disadvantaged business 
enterprises need not be actually disadvantaged. Minority business 
owners who qualify for this program need not be poor or even middle 
class. The secret about this program is that, like many racial and 
gender preference programs, its beneficiaries are quite often wealthy. 
It is worse than no help for those--of all races and ethnicities--who 
could really use a helping hand. Such programs lull the good people of 
this Nation into believing that something's being done when in fact 
little or nothing is being done to help out those who really need the 
help.
  If any set-aside program ought to be eliminated, this should be the 
one. It is the very same program confronted by the Supreme Court in the 
1995 landmark case, Adarand Constructors v. Pena. At that time, the 
Court laid down a standard of strict scrutiny for this program and 
others like it. Under such a standard, the program is unconstitutional 
unless the federal government can demonstrate a compelling purpose and 
has offered a solution that is narrowly tailored to serve that purpose. 
It's a tough standard meet, but it's the standard our Constitution 
demands.

  Last year, on remand, the District Court in Colorado applied the 
strict scrutiny standard and found this program to be wanting. The 
Court therefore held the program to be unconstitutional. That was after 
the Supreme Court had remanded it to the court to determine whether it 
deserved to see the light of day and the District court of Colorado in 
applying the scrutiny standard found this program to be 
unconstitutional.
  That decision was no fluke. Since the Supreme Court's decision in 
Adarand, set aside programs have been consistently found to be 
unconstitutional by the federal courts. Yet, the bill being considered 
by the Senate blithely reauthorizes the program. In doing so, it 
ignores our responsibility to bring the program into compliance with 
the Constitution. That is a responsibility we cannot shirk.
  The United States Senate is now seriously behind the moral curve on 
this issue. The public supports a return to principle. The courts are 
demanding it. The proposed amendment can do that. It eliminates set-
asides based on race and sex and substitutes a non-discriminatory 
program of assistance for ``emerging business enterprises,'' something 
that most of us can agree on. It will help put us back on the right 
road. I urge you to support it.
  Now, if you want the litany of the forty ethnic groups, here it is: 
African Americans, Hispanic Americans, Native Americans--including 
American Indians, Eskimos, Aleuts and Native Hawaiians), Asian-Pacific 
Americans--including persons from Burma, Thailand, Malaysia, Indonesia, 
Singapore, Brunei, Japan, China, Taiwan, Laos, Cambodia, Vietnam, 
Korea, the Phillipines, the Republic of Palau, the Marshall Islands, 
Micronesia, the Northern Mariana Islands, Guam, Samoa, Macao, Hong 
Kong, Fiji, Tonga, Kiribati, Tuvalu, and Nauru, and Subcontinent Asian 
Americans--including persons from India, Pakistan, Bangladesh, Sri 
Lanka, Bhutan, the Maldive Islands and Nepal. Just think about that. 
What we are doing is creating all kinds of special interest groups who 
are vying for these programs and, in the end, the wealthy are getting 
them anyway. But if we have the amendment of the distinguished Senator 
from Kentucky, we will be providing an opportunity for those truly 
emerging businesses that are disadvantaged.

  To me, I see a tremendous difference between the language in the bill 
and the language proposed by the Senator from Kentucky, and I think the 
language proposed by the Senator from Kentucky is constitutional, where 
the language in the bill is unconstitutional.
  I yield the floor.
  Mr. McCONNELL addressed the Chair.
  Mr. CHAFEE. Does the Senator have a short request? I wanted to speak.
  Mr. McCONNELL. I thank the distinguished Senator from Utah. He has 
been a leader in this field of getting rid of unconstitutional quotas 
and preferences, and has been one of the principal cosponsors of the 
bill to eliminate all of the unconstitutional quotas and preferences in 
the Federal Government. I thank the Senator from Utah for his support 
and contribution to the debate.
  Mr. CHAFEE. Mr. President, I have great affection for the Senator 
from Utah, but I don't greet his remarks with the enthusiasm that the 
Senator from Kentucky has.
  The truth of the matter, Mr. President, is that this is the wrong 
amendment, at the wrong time, in the wrong place. Why do I say this? 
This is a transportation bill that every single one of us in this 
Chamber knows is a very important and difficult bill. Trying to balance 
everybody's interest has been very, very difficult. There isn't a 
Senator in this place who doesn't know exactly how much his or her 
State was getting under ISTEA I, then how much under the first proposal 
of ISTEA II,

[[Page S1412]]

and finally how much under these new proposals. And all of them want 
more. As I say, trying to satisfy all of these senators is very 
difficult.
  To come forward with an amendment like this doesn't help. It flies 
right in the face of an October 1997 letter sent to the majority leader 
by the Secretary of Transportation. In that letter, which was sent when 
we first brought up this bill last fall--and there have been no changes 
in his position since then--Secretary Slater talks about the 
President's view on this whole Disadvantaged Business Enterprise, or 
DBE, Program. He closed his letter by saying this:

       This critical effort to achieve equal opportunity must 
     continue. Removal of the DBE program from S. 1173 would be a 
     serious blow to our efforts to assure fundamental fairness to 
     the citizens of this country. I would find it difficult to 
     recommend ISTEA reauthorization legislation to the President 
     for his signature that did not include the DBE program.

  This is a gentle way of saying, listen, folks, if you knock out the 
disadvantaged business enterprise section of S. 1173--which is exactly 
what the Senator from Kentucky is proposing to do--then there is going 
to be a veto of this legislation.
  I see the Senator from Utah here. If I could get his attention for a 
moment. Now, he spoke against the DBE provision of our bill. But my 
question is, why pick on the provision in our bill? It is my 
understanding that similar affirmative action language is contained in 
some 160 different federal statutes or regulations. The Senator from 
Utah chairs the Judiciary Committee--and certainly he is masterful in 
that role, with all the great powers that supposedly appertain to the 
chairmanship of a committee--and thus out of that committee comes 
legislation he wants and bottled up in that committee is legislation he 
doesn't want. I notice that the Senator from Utah now has before him, 
in his own committee, legislation to eliminate all federal affirmative 
action programs, not just this program. So I am asking him--don't pick 
on our little program here that we are desperately trying to get 
through. Imagine, here is an amendment that puts the whole bill under 
the threat of a veto if it is adopted. If the Senator wants to debate 
affirmative action at the federal level, I would say to him, go ahead 
and deal with that issue in your own committee. Don't pick on our 
program. I can't name all 160 federal affirmative action programs, but 
certainly there are Small Business Administration programs and many 
others that have special provisions for disadvantaged parties.

  So if the senator so wishes, go ahead and do a generic bill on 
eliminating affirmative action, and go ahead and have it out here on 
the floor. But I feel helpless here as you all come forward with a 
amendment like the one the senator from Kentucky has offered on our 
bill.
  Mr. McCONNELL. Is the Senator asking a question?
  Mr. CHAFEE. I retract that word ``helpless.'' I feel frustrated. I am 
not totally helpless.
  Mr. McCONNELL. Mr. President, if the Senator was asking a question 
about why the Supreme Court and the district court ruled this provision 
unconstitutional, I say to my good friend that it cried out for 
correction.
  Mr. CHAFEE. Let me answer that quickly. There may be many arguments 
against the DBE, but I must say that your weakest one is this so-called 
unconstitutional argument. We all know about the constitutionality 
issue. In 1995, the Supreme Court handed down a decision in Adarand v. 
Pena. In Adarand, the justices specifically said that federal 
affirmative action programs are not unconstitutional. As long as the 
programs meet a compelling governmental interest and are narrowly 
tailored, then they can pass constitutional muster. Now, US District 
Judge Kane, to whom the case was remanded, ended up holding that part 
of the DOT regulations were unconstitutional on the grounds they were 
not narrowly tailored. But that is going to be corrected under the new 
regulations that are due out this spring. So as I say, of all your 
arguments, that really is the weakest. As a matter of fact, I will give 
you an opportunity to jettison that argument, if you want.
  Mr. McCONNELL. I say to my good friend from Rhode Island, there has 
been no compelling interest found here, no such finding at all. I 
guess----
  Mr. CHAFEE. Wait a minute. I don't want you to get on with that. 
Judge Kane found there was a compelling interest.
  Mr. McCONNELL. But not narrowly tailored. There have to be two 
standards: narrowly tailored and compelling interest. Narrowly tailored 
was not met and, consequently, this effort to jimmy around with the 
regulations is not going to cure the problem. What is going to happen, 
if the Senator is successful in defeating the amendment, is that some 
other plaintiff is going to have to bring some other case, at a cost of 
thousands in legal fees, to get this struck down one more time.
  Mr. CHAFEE. Mr. President, I haven't heard from the Senator from 
Utah, the distinguished chairman of the committee who has power over 
all these affirmative action programs. Why doesn't he go after all of 
them? That would be a rather magnificent effort. It certainly would 
shake things up. The senator could come to the Senate and try to get 
rid of all 160 different affirmative action programs. Why doesn't he do 
that instead of picking on the highway program? Go after all of them. 
There is a suggestion for you. I certainly would not support that 
effort, but I am saying that if you really want to get into an 
affirmative action debate, why you don't do that, through your 
committee.
  Mr. HATCH. If the Senator will yield, let me just say that we are 
going after all of these preferential programs. This is the first of 
the 160. We may have to do them one by one, because it is very 
difficult to even get an all-embracing bill up. But whether we go after 
them one by one or en bloc, it is important that we go after them. If 
we allow them to go on, we will be violating one of the basic 
principles of the Constitution--that is, treating people equally. We 
will be violating the actual, legitimate, straightforward language of 
the Constitution and the 1964 Civil Rights Act, which provide equal 
opportunity for all, not for a select few.
  Now, with regard to this particular bill, I want to compliment my 
dear friend from Rhode Island and my friend from Montana, the two 
distinguished Senators, because they have carried what is a very 
difficult bill all the way to this position. I am not here to give them 
a rough time, but I do think that it's time that we do something about 
these unconstitutional set-asides and preferences. Whether we do it 
individually, each of the 160 programs, or whether we do it en bloc, 
it's time to try and set the record straight with regard to how these 
funds should be used.
  Now, if the distinguished Senator from Kentucky were asking to 
prevent disadvantaged businesses from benefiting from these funds, I 
probably would part company with him. But he has a specific provision 
in here that would help emerging new business enterprises that 
otherwise might have difficulty competing to obtain some of this money. 
I heard one of our colleagues talk about various companies--I think it 
was the Senator from Minnesota--he talked about companies owned by 
minorities and women who literally deserve a right to compete because 
they are very competent and very good. Well, if they are very competent 
and good and they can compete, then they ought to compete for this work 
on the same terms and conditions as anybody else.
  We should not be opening up a loophole here where companies that are 
very capable of competing have an absolute set-aside so they don't have 
to compete. I think that is what the Senator from Kentucky is doing. As 
far as I am concerned, I think we ought to go after these programs and 
straighten them out so they are not lacking in constitutionality--one 
at a time, or 10 at a time, or 160 at a time. Ultimately, I think we 
will probably vote on a full en bloc amendment. Until then, let's make 
these bills as constitutional as we can.
  The PRESIDING OFFICER (Mr. Hutchinson). Who yields time?
  Mr. BAUCUS. Mr. President, I yield myself such time as I may consume. 
I see the Senator from Maine on the floor, so I will be brief. I want 
to just make a couple of points here.
  One, I will reiterate a point made by Senator Chafee. We, in the 
Senate, have received a letter from the Secretary of Transportation, 
Rodney Slater, who said he would find it difficult to recommend to the 
President

[[Page S1413]]

for signature ISTEA legislation that did not include the DBE Program, 
which has been noted in a statement that he would recommend the 
President veto this bill if the DBE Program is taken out.
  I don't want to belabor this constitutionality argument, but it's 
clear that the Supreme Court did not rule that the Federal highway DBE 
Program in Colorado was unconstitutional. The Supreme Court did not 
rule it unconstitutional. It is clear. All Senators who have studied 
this know that. The Supreme Court said that program, like all 
affirmative action programs, must be subjected to a strict scrutiny 
test. That is what the Supreme Court held, that the Colorado public 
lands DBE Program had to be subject to the strict scrutiny test. That 
is all they held--nothing more, nothing less. The strict scrutiny test 
has two parts, compelling interest and narrow tailoring. Even the 
district court in Colorado said it looks like a compelling interest. So 
the only question is whether the program was narrowly tailored. A 
district court judge found, in his judgment, that it was not narrowly 
tailored. Well, that is one man's opinion. That is a district court 
judge's opinion. District court judges declare statutes 
unconstitutional all the time, only to find them overturned by the 
Supreme Court.
  There is only one body that determines whether a statute is really 
constitutional or not, and that is the Supreme Court. The Supreme Court 
has not ruled up or down on the constitutionality of the program in 
Colorado. They have not ruled. In fact, the U.S. Government has filed 
an appeal on the district court decision. I have a letter from 
Associate Attorney General Raymond Fisher to Senator Daschle, which 
states that:

       As we discuss further below, we believe that the ISTEA 
     program is narrowly tailored to meet this compelling interest 
     and is constitutional under the Adarand standards.

  The U.S. Government is going to appeal.
  I ask unanimous consent that this letter printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

         U.S. Department of Justice, Office of the Associate 
           Attorney General,
                                    Washington, DC, March 3, 1998.
     Hon. Thomas A. Daschle,
     U.S. Senate,
     Washington, DC.
       Dear Senator Daschle: This letter responds to your request 
     for the Department of Justice's views regarding the 
     constitutionality of the Disadvantaged Business Enterprise 
     (DBE) program of the Intermodal Surface Transportation 
     Efficiency Act (ISTEA). I have been charged with supervising 
     the Department's review of affirmative action programs at 
     federal agencies, to ensure that such programs meet the 
     constitutional standards enunciated by the Supreme Court in 
     Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995). The 
     Congress has repeatedly found that racial discrimination and 
     its effects continue, and that eradicating the effects of 
     discrimination is a compelling interest. As we discuss 
     further below, we believe that the ISTEA program is narrowly 
     tailored to meet this compelling interest and is 
     constitutional under the Adarand standards.
       Under the ISTEA DBE program, the Department of 
     Transportation takes steps to ensure that firms qualifying as 
     disadvantaged businesses are made aware of contracting and 
     subcontracting opportunities in federally assisted state and 
     local construction projects, and that prime contractors use 
     DBEs to do some portion of federally assisted construction 
     projects. As explained below, Congress has found that without 
     the use of affirmative action measures such as the ISTEA DBE 
     program, minority-owned firms would be severely disadvantaged 
     in federally assisted construction projects. The program 
     serves a compelling interest and is narrowly tailored to 
     accomplish that interest.
       Congress originally established the federal highway DBE 
     program in the Surface Transportation Assistance Act of 1982, 
     based on a compelling record demonstrating that efforts were 
     needed to ensure that federal highway dollars were not used 
     to perpetuate the effects of racial discrimination on the 
     ability of minority-owned small businesses to participate in 
     government contracting opportunities. Indeed, the Supreme 
     Court in 1980 addressed a very similar provision involving 
     federally-assisted public works projects. See Fullilove v. 
     Klutznick, 448 U.S. 448 (1980). The Court analyzed a number 
     of Congressional studies and reports issued prior to the 
     provision at issue there, and found that ``Congress had 
     abundant evidence from which it could conclude that minority 
     businesses have been denied effective participation in public 
     contracting opportunities by procurement practices that 
     perpetuate the effects of prior discrimination.'' 448 U.S. at 
     477-478.
       Since that time, Congress has continued to oversee the DBE 
     program and has frequently reevaluated the continuing need 
     for it. See, e.g., The Disadvantaged Business Enterprise 
     Program of the Federal-Aid Highway Act: Hearing Before the 
     Subcomm. on Transp. of the Senate Comm. on Environment and 
     Pub. Works, 99th Cong., 1st Sess. (1985) (testimony on need 
     for program and capacity of minority-owned firms); Review of 
     the 10-Percent Set Aside Program, Section 105(f) of the 
     Surface Transportation Assistance Act of 1982: Hearings 
     Before the House Comm. on Small Business, 98th Cong., 2d 
     Sess. (1984) (testimony on problems faced by DBEs).
       On the basis of extensive evidence that the effects of 
     discrimination continue to hamper the efforts of minority 
     firms to compete equally in public construction contracting, 
     Congress has twice reauthorized the program, first in the 
     Surface Transportation and Uniform Relocation Assistance Act 
     of 1987 (which also added a provision including women-owned 
     businesses in the program \1\), and again in 1991 in ISTEA. 
     In 1987, Congress expressly found that ``barriers still 
     remain'' to full participation by minorities and women in the 
     highway and mass transit construction industry. S. Rep. No. 
     100-4 at 11. The House Committee on Small Business found 
     ``discrimination and the present effects of past 
     discrimination'' caused minority businesses to receive ``a 
     disproportionately small share of Federal purchases.'' H.R. 
     Rep. No. 100-460 at 18 (1987).
---------------------------------------------------------------------------
     Footnotes at end of letter.
---------------------------------------------------------------------------
       The compelling interest that supported the DBE provisions 
     of prior legislation still exists today. Congress has 
     continued through the 1990s to hear testimony and review 
     statistical evidence supporting the ongoing need for race- 
     and gender-conscious measures to ensure that minority- and 
     women-owned firms are not disproportionately excluded from 
     federally assisted highway and transit projects. For example, 
     in 1994 the House Committee on Government Operations found 
     that minority-owned firms face particular difficulties in the 
     construction industry due to negative perceptions by 
     commercial lenders and domination of the industry by ``old 
     buddy'' networks and family firms. H.R. Rep. No. 103-870 at 
     6-8, 15 & n.36 (1994). One particularly troubling area is 
     discriminatory treatment in obtaining credit and bonding, 
     which creates a negative cycle in which minority firms are 
     unable to overcome their perceived high-risk status. See, 
     e.g., Discrimination in Surety Bonding: Hearing Before and 
     Subcomm. on Minority Enterprise, Finance, and Urban 
     Development of the House Comm. on Small Business, 103d Cong., 
     1st Sess. 2-3, 7-9, 16, 18, 25-26, 41 (1993); Availability 
     of Credit to Minority-Owned Small Business: Hearing Before 
     the Subcomm. on Financial Institutions Supervision, 
     Regulation and Deposit Insurance of the House Comm. on 
     Banking, Finance and Urban Affairs, 103d Cong., 2d Sess. 
     19-20, 22, 27 (1994). See generally 61 Fed. Reg. 26,042 
     26,057-26,058 (1996). Congress's examination of these 
     problems demonstrates quite clearly that discrimination is 
     in part responsible for the condition of firms owned by 
     minorities and by women, and that remedial action is still 
     necessary to ensure that the effects of discrimination do 
     not prevent minority- and women-owned small businesses 
     from competing on an equal footing for the federal 
     expenditures that will be authorized in the new highway 
     and mass transit bill.
       In addition, the ISTEA program is narrowly tailored to meet 
     the compelling interest identified by Congress. The ISTEA 
     goals are not quotas, are renegotiated on an annual basis and 
     are not mandatory. Rather, the program allows recipients the 
     flexibility to determine the level of DBE participation 
     appropriate to current local conditions. Moreover, under the 
     current program, agencies are permitted to waive goals when 
     achievement in a particular contract, or even for a specific 
     year, is not possible.\2\
       Recent regulations proposed by the Department of 
     Transportation will further ensure that the ISTEA's DBE 
     program is operated in a constitutional manner. The new 
     regulations would require the state or local goal for DBE 
     participation to be based on an assessment of the 
     availability and capacity of DBEs in the state or local 
     construction market. In this way, non-minority firms will not 
     be unfairly disadvantaged by the use of affirmative action 
     measures. The regulations also direct states and localities 
     first to use race-neutral means (such as outreach and 
     technical assistance, or simplifying bonding or surety costs 
     in bid requirements) to achieve their goals; where the state 
     or locality achieves the goal in that manner, affirmative 
     action measures that provide competitive advantages to DBEs 
     would be unnecessary. The regulations also bolster provisions 
     that ensure that firms owned by wealthy individuals will not 
     be certified as DBEs, and clarify that non-minority 
     individuals who also have suffered discrimination can be 
     certified as owners of DBEs and therefore receive the same 
     benefits that may be available to minority-owned DBEs. 
     Finally, the new regulations expand methods by which 
     challenges can be filed by third parties, as well as by state 
     and local officials, where questions are raised about the 
     bona fide status of any firm certified as a DBE.
       In sum, as we have stated in defending the ISTEA program in 
     court, the Department of

[[Page S1414]]

     Justice believes that the ISTEA program is constitutional.
           Sincerely,
                                                Raymond C. Fisher.


                               footnotes

     \1\ Courts have applied intermediate scrutiny to gender-based 
     affirmative action programs, requiring that such programs 
     serve important governmental objectives and be substantially 
     related to achieving those objectives.
     \2\ The ISTEA program was addressed in Adarand v. Pena, 965 
     F.Supp. 1556 (D. Colo. 1997). On appeal, we have argued that 
     the district court improperly reached the constitutionality 
     of the ISTEA program.

  Mr. BAUCUS. Here is another letter signed by many law school 
professors. I see 40 or 50, I don't know. They have the same 
conclusion--that the district court's decision in Colorado was wrong; 
that is, that the program is narrowly tailored and is constitutional.
  Now, if that is not enough, the Department of Transportation has new 
regulations, which go even further, and with more flexibility, to make 
it even more clear that the program is narrowly tailored. Some Senators 
spoke up and said, gee, wealthy people are, under this definition, 
socially disadvantaged. Not true under the new regs. They have a net 
worth test. If you are wealthy, you don't qualify. There are lots of 
new provisions in the new regulations that will go into effect. They 
are in the drafting stage now.
  Again, just because a district court judge says it is 
unconstitutional doesn't make it so. The only thing that does that is a 
decision by the U.S. Supreme Court. They haven't ruled on this.
  Second, many think the judge is wrong--many. Finally, there are new 
regs which are much more flexible and which clearly make this narrowly 
tailored. For that reason, this is not unconstitutional because it is 
fair and helps people and it works. It should remain in the bill.
  Ms. COLLINS addressed the Chair.
  The PRESIDING OFFICER. Who yields time?
  Mr. CHAFEE. I yield the Senator from Maine such time as she desires.
  The PRESIDING OFFICER. The Senator from Maine.
  Ms. COLLINS. Thank you, Mr. President.
  Mr. President, there is much in the amendment offered by the Senator 
from Kentucky that I support. I particularly support its expansion of 
outreach efforts designed to help emerging small businesses compete for 
Federal contracts.
  I think that those specific provisions of the amendment offered by 
the Senator from Kentucky would truly be very helpful to a lot of small 
businesses regardless of their ownership. Moreover, I share the 
opposition of the Senator from Kentucky to numerical quotas. I don't 
like the numerical quotas that are in current law. Whether or not they 
are constitutionally suspect, they are certainly inflexible, and they 
are often unfair.
  I am also opposed to creating a permanent entitlement or preference 
for businesses based upon their ownership by minorities or women. We 
should be providing such businesses a hand up, not a permanent handout. 
However, I believe that the amendment offered by the Senator from 
Kentucky goes too far. In my view, the programs funded under ISTEA 
should include a nonnumerical goal--not a quota, not a 10-percent set-
aside, but a goal aimed at increasing participation by disadvantaged 
business enterprises.
  Unfortunately, the Senator from Kentucky has indicated that he is 
unwilling to alter his proposal in this manner, and, for that reason, I 
am going to vote against his amendment.
  Mr. President, we all talk about the legalities of this issue. But I 
would like to try to put a human face on the matter before us. Let me 
tell you of a specific example of the benefits of the Disadvantaged 
Business Enterprise Program, a specific case involving a woman from 
Maine named Tina Woodman. Tina, in her own words, went from being a 
waitress to being an ironworker, to being the president of her own 
company. As a matter of fact, I talked with Tina just this afternoon 
about her story, with which I was already very familiar.
  Tina, after receiving specialized training, was able to go from being 
a waitress for 10 years to learning to be an ironworker, to opening up 
and becoming president of her own company, Maine Rebar Services. In 
fact, she and her company worked this past summer on the Casco Bay 
Bridge project in Maine, one of the largest construction projects our 
State has ever had.
  By building her own business, Tina has not only been able to provide 
for her 6-year-old daughter, but for the first time in her life she has 
also been able to buy her own home. She told me, and her daughter told 
me, that the best part of this was that they could now plant flowers in 
their own front yard.
  Every time I drive across or see the Casco Bay Bridge, I think of 
Tina Woodman, and I think of her daughter and the flowers growing in 
their front yard.
  All of this wonderful story would never have come about but for the 
opportunity given to Tina through the Disadvantaged Business Enterprise 
Program. Hers is the kind of success story that this kind of program 
can bring about when it is properly applied.
  Mr. President, we do need to reform this program. We need to make 
sure that it is carefully tailored so as to give people a little bit of 
a hand up so that they can participate in the American dream.
  For this reason, Mr. President, I am going to reluctantly oppose the 
amendment offered by the Senator from Kentucky. I hope, however, that 
he and others will be willing to work with me in order to reshape these 
programs.
  Thank you, Mr. President. I thank the managers of the bill, and I 
yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. McCONNELL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. I yield such time has he may need to the distinguished 
Senator from Washington.
  The PRESIDING OFFICER. The Senator from Washington is recognized.
  Mr. GORTON. Mr. President, the 14th amendment to the Constitution of 
the United States relevant to this discussion reads ``nor shall any 
State deny to any person within its jurisdiction the equal protection 
of the laws.''
  There was over an extended period of time a debate in the Supreme 
Court as to whether or not that equal protection clause, applicable by 
its terms only to States, applied as well to the Federal Government. 
The Supreme Court has decided that question essentially in the 
affirmative simply by stating that the fifth amendment to the 
Constitution, through its due process clause, incorporates the 
philosophy identical to the equal protection clause in the 14th 
amendment.
  The next debate is over whether or not a nonmember of a minority has 
the ability to claim discrimination by reason of a provision like the 
one that is at issue here today. The Supreme Court in the Adarand case, 
a case already discussed at length during the course of this debate, 
says, ``The principle of consistency simply means that whenever the 
Government treats any person unequally because of his or her race, that 
person has suffered an injury that falls squarely within the language 
and the spirit of the Constitution's guarantee of equal protection.''
  Finally, with respect to this provision here, the Court in that case 
said, ``It follows from that principle that all governmental action 
based on race, a group classification, long recognized as in most 
circumstances irrelevant and therefore prohibited, should be subjected 
to detailed judicial inquiry to ensure that the personal right to equal 
protection of the laws has not been infringed. A free people whose 
institutions are founded upon the doctrine of equality should tolerate 
no retreat from the principle that government may treat people 
differently because of their race only for the most compelling reasons. 
Accordingly, we hold today that all racial classifications imposed by 
whatever Federal, State, or local governmental action must be analyzed 
by a reviewing court under strict scrutiny. In other words, such 
classifications are constitutional only if they are narrowly tailored 
measures that further compelling government interests.''
  As against that, what do we have here? The heart of the amendment 
proposed by the Senator from Kentucky strikes a section identical to 
the present law that says, ``Except to the extent that the Secretary 
determines, otherwise not less than 10 percent of the amounts made 
available for any program under titles I and II of this

[[Page S1415]]

Act shall be expended with small business concerns owned and controlled 
by socially and economically disadvantaged individuals.''
  The dual statutory definition of ``disadvantaged'' deals with sex and 
with racial minorities.
  Mr. President, I do not see that it can seriously be maintained that 
a national quota stating ``no less than 10 percent'' can possibly be 
justified under that Supreme Court language granting neutral equal 
protection of the laws of the United States to every single individual.
  Clearly, the Supreme Court allowed a case-by-case evaluation of 
disfavored classes, mostly racial minorities, to determine whether or 
not they had suffered discrimination and, therefore, required specific 
aid in order to catch up and to be put on an equal plane. But nothing 
in the portion of this bill which the McConnell amendment would strike 
speaks to that kind of consideration. It simply says that all of those 
not defined as disadvantaged in our society are absolutely barred and 
prohibited from getting certain governmental contracts.
  Once again, I read from the Supreme Court decision. ``A free people 
whose institutions are founded upon the doctrine of equality should 
tolerate no retreat from the principle that government may treat people 
differently because of their race only for the most compelling 
reasons.''
  Not only are there no compelling reasons in this section of this 
bill, there are no reasons at all. Simply 10 percent of contracts are 
barred from being awarded to any person outside this disfavored class.
  Is it any wonder that the district court on remand summarily entered 
judgment in favor of the plaintiff in that case? Of course. There is no 
possible way of finding this statute to be constitutional.
  That district court opinion is now on appeal in the 10th circuit, I 
understand. It is possible that the ensuing decision may again be 
appealed to the Supreme Court. I would give 20-to-1 odds that the 
Supreme Court will simply deny certiorari since the conclusion is so 
obvious.
  This does not mean that the sponsors of this bill could not have 
written in this bill a narrowly tailored specific set of preferences 
for people against whom specific discriminatory actions had been taken, 
tailoring it to meet the very requirements of the Constitution laid 
down by the Supreme Court in a decision, the result of which, it seems 
to me, was obvious.
  But, Mr. President, the sponsors of this bill did not do that. 
Whatever excuse the authors of the previous proposal 5 years ago may 
have had, the authors of this bill had none. They know what is required 
in order to discriminate. They ignored the views of the Supreme Court. 
And they say, we don't care, we are going to continue this flat quota. 
This is not the affirmative action about which we have been having a 
legitimate debate over whether or not there ought to be certain forms 
of assistance provided to disadvantaged people. This is a debate about 
the most explicit quota one can possibly imagine and it is simply 
irresponsible for us to continue.

  If the sponsors of the bill do not like the specific proposal that is 
substituted for this quota, proposed by Senator McConnell, fine. Let 
them come up with one that meets constitutional muster. I think they 
can. It is just that they have simply not done so to this point.
  Mr. President, the preceding speaker has talked about what the 
advantages of the present system have been, in a simple case. I ask 
unanimous consent to have printed in the Record correspondence from a 
general contractor, Frank Gurney, Inc., in Spokane, WA.
  There being no objection, the letters ordered to be printed in the 
Record, as follows:

                                           Frank Gurney, Inc.,

                                     Spokane, WA, October 9, 1997.
     Hon. Slade Gorton,
     Hart Senate Building,
     Washington, DC.

     Re McConnell amendment to the D.B.E. program for Federal aid 
         highway construction.

       Dear Senator Gorton: We are a small subcontracting firm in 
     Spokane, Washington. We specialize in highway guardrail and 
     signing. More than 95% of our market is Federal, State or 
     County agency work--funded mostly with State and Federal 
     moneys. We are writing to you on the issue of Affirmative 
     Action. We are not a ``woman'' or ``minority'' owned firm--we 
     are simply Americans. My step-father, Frank Gurney, started 
     the firm in 1959--my brothers and I working with him to build 
     the business from nothing. We all worked very hard for a lot 
     of years to make it a good sound company. Frank Gurney passed 
     away in 1989 with the Affirmative Action quotas that 
     discriminated against our Company as the worst nightmare he 
     had ever experienced and could not overcome. Since Frank 
     passed away the nightmare of discrimination for our Company 
     goes on every week at the bidding table as it has for the 
     last 14 years.
       So then please find enclosed correspondence regarding the 
     years of discrimination our firm has experienced.
       Most Prime Contractors refuse to write these letters 
     because they always fear litigation--they also know that they 
     are in the middle of government mandated discrimination--that 
     it is in fact not only Constitutionally wrong but morally 
     wrong!
       Please know that the intent of this letter is to inform you 
     with our documentation of legislation that No. 1, is very 
     constitutionally wrong and No. 2, does not work at all as 
     intended.
       Our M.B.E.--W.B.E. competitors in Washington are mainly 
     Junlo Corp. (D.B.A.)--Asian owned, and Peterson Corp. 
     (W.B.E.--Woman owned, from Western Washington along with 
     other out of State M.B.E. firm--Dirt and Aggregate Inc. of 
     Oregon (? owned), Alexander--Martin of Boise, Idaho (W.B.E.) 
     Women owned--Omo Construction of Billings Montana--M.B.E. 
     (Indian owned). We compete with these firms at the bidding 
     table here in the Northwest nearly every week. They are all 
     strong well run firms that have been in business long before 
     the era of Mandatory quotas. We welcome them as competitors 
     on equal footing, but the D.B.E.--M.B.E. quotas in Federal 
     and State funded projects is an unfairness that is very, very 
     hard to overcome. They are larger firms than ours--they need 
     no help--yet they continue to enjoy that advantage of being 
     awarded work that they are not low bidder on simply because 
     of M.B.E.--D.B.E. quotas in government contracts.
       We have realized long ago that Affirmative Action attitudes 
     are strongly entrenched in our government--and you as a 
     politician (until possibly now) would view your vote against 
     Affirmative Action as possible ``political suicide'' 
     regardless of your inward belief--it just ``seems so right'' 
     but is so wrong!
       We like all conscientious Americans are very much in favor 
     of helping the truly disadvantaged but reverse discrimination 
     and quotas are not the way!!!
       The thousands of dollars that our firm was low bidder on 
     through the years could have easily paid for a teacher that 
     would give 25 disadvantage minority children the economic, 
     social and academic headstart that would help them to become 
     responsible mainstream American citizens--but instead those 
     dollars simply lined the pockets of a few that did not need 
     help at all.
       It is true--simply look into it with the Washington State 
     Department of Transportation. We of course do not have access 
     to exact numbers but we are most certain that if you were 
     informed of the truth you would find less than 5% of 
     registered M.B.E.--W.B.E. firms in Washington are doing more 
     than 95% of the quota dollars and that most of these firms 
     doing 95% of the dollars should have graduated from the 
     program long ago--but they remain in the program simply 
     because they are unchallenged. There is no course of action 
     allowing the Washington Department of Transportation, The 
     Idaho Transportation Department, or the Montana Department of 
     Transportation or anyone else to challenge them. They are the 
     same firms--week after week--month after month--year after 
     year that fill the quota requirements. These firms then 
     squeeze out and suffocate other smaller minority owned firms 
     that try to get started. After an on going gift of 14 years--
     the large and established minority owned firms can and do 
     price the small ``Trying to get going'' minority firm out and 
     it is usually does not take very long at prices below cost to 
     do so. So then none of the Department of Transportation want 
     these larger firms out of their programs because they are 
     needed to comply with the legislative quotas that come with 
     Federal Dollars. We on the excluded side of this program are 
     an exact mirror of the ``Adarand'' guardrail firm in Colorado 
     which now is the focus of the Supreme Court ruling--and until 
     now we all know that the courts of America have strongly 
     ruled in favor of M.B.E.--W.B.E. regardless of the nature of 
     litigation. Litigation that no small company such as ours 
     could ever afford without financial ruination--which would 
     occur before a challenge could ever be heard.
       We are not insinuating that anyone in the Department of 
     Transportation or any other agency is doing anything wrong--
     in fact they are simply doing their job carrying out the 
     wishes of Congress. We are simply trying to display the poor 
     investment of tax dollars under the stewardship of Congress 
     that does not do as it was intended and is compounded with 
     promulgating more discrimination--that very same 
     discrimination that our country is trying to abate!!!
       Our firm is not unlike any other small white male owned 
     firm in America that suffer daily from the discrimination 
     promulgated by the government of the United States in its 
     contracting policies.
       We believe that God created us all equal. The Constitution 
     of the United States--the

[[Page S1416]]

     most powerful document of democracy the world has ever known, 
     clearly was written by our Founding Fathers--that is God 
     created all men equal then it follows that the document of 
     the Constitution would be so written that is govern all men 
     and women under it as equals. So then why are we not being 
     governed equally? Our government now has preferences based on 
     race and color--the Government has simply uprooted and set 
     the Constitution aside and entered the business of 
     discrimination.
       It is wrong.
       We, again would like to affirm that we are simply 
     displaying our experience so that indeed you may be informed 
     with knowledge of the reality regarding this very difficult 
     issue--thus the attached sampling of correspondence from our 
     very large files. We love our Country--we pay our taxes and 
     we play by the rules. We, again, do believe in helping the 
     truly disadvantaged and would and do very much support 
     programs that do so--but mandatory goals and quotas are again 
     simply not the way.
           Sincerely,
                                                   Thomas Stewart,
     President.
                                                                    ____



                                          Steelman-Duff, Inc.,

                                     Clarkston, WA, July 17, 1996.
     Mr. Tom Stewart
     Frank Gurney, Inc.
     Spokane, WA.

     Re Contract no. 4916, East Lewis Street Interchange.
     Subject: Quote.

       Dear Tom: This letter is written as per our conversation 
     regarding your recent quotation on subject project. I had 
     informed you that you were apparent low quote on bid items 
     72, 73, 74 and 75, but due to MBE and WBE goals I could not 
     utilize you. Your quote on the above bid items amounted to 
     $29,031.27. Petersen Brothers, a WBE firm quoted $31,902.00 
     for the same work. I was forced to utilize the WBE firm as 
     the difference in your two quotes was very small and created 
     the least amount of inflation to meet assigned goals.
       We thank you for your quote and understand your situation. 
     We are forced to inflate our bids to cover added costs on all 
     Federal, State, County and City projects that have DBE, MBE 
     or WBE goals assigned. This particular project the added cost 
     ranged in the vicinity of $20,000.00.
       We trust you understand and if added information is needed, 
     please contact us.
           Very truly yours,
                                               Wayne L. Van Zante,
     Vice President.
                                                                    ____

                                                 Associated Sand &


                                             Gravel Co., Inc.,

                                       Everett, WA, April 7, 1981.
     Frank Gurney Inc.
     Spokane, WA.

     Re State highway bid for SR 90, Tyler to Salnave Road, bid 
         date April 1, 1981.

       Gentlemen: We acknowledge receipt of and we thank you for 
     your guard rail quotation for subject project.
       While your bid was lower than the quotation we used in 
     preparing our bid, we were obligated to use the higher 
     quotation to satisfy the 6% Minority Business Enterprise goal 
     as set forth in the specifications for subject project.
       While we were unable to use your lower price quotation, we 
     trust you will continue to quote prices to our firm on future 
     projects.
           Very truly yours,
                                                     Jack Zeigler,
     Chief Estimator.
                                                                    ____

                                                  Robert B. Goebel


                                      General Contractor, Inc.

                                      Spokane, WA, April 25, 1996.
     Frank Gurney, Inc.
     Spokane, WA.

     Attn: Tom Stewart.
     Re Laurier Bridge replacement, Stevens County, WA, CRP-601A; 
         BROS-2033 (018); 5A-2802.

       Gentlemen: We were apparent low bidder at $1,393,851.00 on 
     the referenced project which bid on 4/23/96 at 11:00 AM.
       We received two bids from guard rail subcontractors:
       (1) Gurney: $29,598.00.
       (2) Petersen Brothers (DBE): $34,745.25.
       As you know, there was a 10% DBE requirement in the 
     solicitation documents, which amounted to just under 
     $140,000.00. Even though you were significantly lower than 
     Petersen Brothers, we regret to inform you that we felt 
     compelled to use their amount to help achieve our DBE goal.
           Sincerely,
     Steven R. Goebel.
                                                                    ____



                                          Gilman Construction,

                                                      May 1, 1995.
     Frank Gurney Inc.,
     Spokane, WA.

     Attn: Tom Stewart.
     Re Monida-Lima.

       Dear Tom: We would like to thank you for your guard rail 
     quotation on the Lima-Monida Project. Although you had the 
     low guard rail quotation, we were forced to use a higher 
     quotation to meet our DBE requirements.
       Listed below are the guard rail prices we received on the 
     project:
       Frank Gurney, Inc.--142,906.45.
       Omo Construction, Inc.--150,351.55.
       Scott Long Construction--151,278.00.
       Once again, we would like to thank you for your quotation 
     and hope you will continue to quote any future work.
           Sincerely,
                                                  George M. Friez,
     Engineer.
                                                                    ____



                                   Westway Construction, Inc.,

                               Nine Mile Falls, WA, June 28, 1995.
     Frank Gurney, Inc.,
     Spokane, WA.

     Attn: Tom Stewart.
     Re: SR 27 & 23 bridge rail update/bridge replacement.

       Tom: We regret we cannot use your quotation for this 
     project. Although your price for the guardrail items was 
     $2000.00 lower than Petersen Brothers, we were unable to use 
     you as we needed Petersen to meet our DBE goal.
           Sincerely;
                                                     Mark Johnson,
     Estimator.
                                                                    ____



                                            Frank Gurney Inc.,

                                    Spokane, WA, October 29, 1997.
     Senator Slade Gorton,
     Hart Senate Building,
     Washington, DC.
       Dear Senator Gorton: Please find another letter of 
     rejection attached that we just received today from Inland 
     Asphalt Company of Spokane. Peterson Bros. is a well run 
     firm--larger than ours--that is--and has--for 15 years--
     benefited from your discriminatory ``Quota'' affirmative 
     action policies and legislation. We are not crying ``Sour 
     Grapes'' or ``Belly Aching'' we simply are again wondering 
     how you would feel if this were you in receipt of letter 
     after letter of this rejection (our file has many of them--
     dating throughout 16 years) How would you feel about 
     displaying this letter to your employees and your family. How 
     do I tell my sons--who work in the company--and my employees; 
     not to hold prejudice? I don't know--I only know I really 
     don't know--I only know that it is wrong! Very Very wrong--
     yet promulgation of this wrong continues in America by our 
     Government. It surely seems that the very discrimination that 
     you as government are trying to abate simply continues with 
     you at the top of the list as its greatest advocate. We 
     expect as usual no response--of course realizing we are the 
     ``down side'' of the ``greater good''--regardless of right or 
     wrong.
           Sincerely,
                                                Thomas C. Stewart,
     President.
                                                                    ____



                                           Inland Asphalt Co.,

                                    Spokane, WA, October 27, 1997.
     Tom Stewart, P.E.,
     Frank Gurney, Inc.,
     Spokane, WA.
       Dear Tom: I regret to inform you that although yours was 
     the lowest guardrail quote that I received for the WSDOT 
     Project SR 26 to Lind Coulee Bridge, I found it necessary to 
     use the third lowest guardrail quote in order to meet the DOT 
     requirement of 10% DBE. The second low guardrail quote was 
     from Coral Construction Company but they also are not a DBE 
     firm. The third lowest quardrail quote and lowest DBE 
     guardrail quote came from Petersen Brothers, Inc. (DBE/WBE 
     #D2F0901575). By using Petersen Brothers, Inc., along with 
     DBE traffic control and planing, we were able to just barely 
     meet the 10% DBE requirement at a cost of $11,768.76 to the 
     project.
       We at Inland Asphalt Company think highly of the 
     professionalism and quality of work that we have always 
     received from Frank Gurney, Inc. I hope that this does not 
     discourage you from quoting us on future projects.
       If you have any questions, please call me at 536-2631.
           Sincerely,
                                                  Lee T. Bernardi,
                                                  Project Manager.

  Mr. GORTON. This illustrates what happened in the real world. It 
includes a half dozen responses to this small business company with 
respect to contract submissions in which it was the low bidder, in 
which the general contractor says, we would like to have picked you, we 
would have saved money for the taxpayers had we picked you, but we 
cannot pick you because of absolute orders from the Department of 
Transportation because of a quota system.
  Ironically, the winning high bidders in several of these contracts 
are larger business enterprises than is Frank Gurney, Inc., with a 
longer history. The net result is fewer roads are built and improved in 
order to provide contracts for people less disadvantaged than the low 
bidder. That is the real world impact of what we have done here.
  The Senator from Kentucky knows that we have certain disagreements 
over what the affirmative language in his amendment should have 
included. I would have done it somewhat differently. But I am here 
because I believe that the fundamental approach he has taken to strike 
an express percentage racial quota is not only the only appropriate 
response under the Constitution but is the only appropriate,

[[Page S1417]]

just response in a society based on the proposition that people deserve 
equal treatment and only equal treatment.
  Mr. President, it seems to me that this is an open-and-shut case. We 
should repeal the sections to be stricken here. If a majority of this 
body believes in a form of affirmative action, then it should devise a 
form of affirmative action that meets the strict-scrutiny standards set 
down by the Supreme Court and does not include a quota system that is 
entirely unrelated to whether or not its beneficiaries have ever 
suffered any discrimination whatsoever.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. Mr. President, there are many lawyers in the Senate, 
some out in the land believe too many. But it is my judgment that the 
finest lawyer in the Senate is the Senator from Washington. I thank him 
for his clear explanation of what the law demands in this situation.
  No effort by the other side to obscure the obvious, it seems to me, 
should fool anyone. The Senator from Washington has laid it out with 
extraordinary clarity. This provision in the bill before us is 
unconstitutional. I thank the Senator from Washington for his support 
of the Constitution.
  Mr. President, a number of the opponents of the amendment have said 
they know discrimination exists in this kind of economic activity 
because the numbers of minority participants have dropped in Michigan 
and in Louisiana. Colleagues have lamented the loss of the DBE programs 
in those two States, Louisiana and Michigan, but what they fail to 
point out was that those DBE programs were terminated based on court 
decisions that held that the preferences were unconstitutional, and 
that is, of course, precisely what we are discussing here today, the 
constitutionality of these kinds of race-based set-asides.
  Even the Department of Transportation has quietly conceded that 
disparity figures do not prove discrimination. Let me share this quiet 
concession buried in the jungle of Federal regulations. The 
administration notes that:

       Minority firms may receive less work because of the 
     following reasons: Lack of interest in the work, other 
     commitments, limitations of the amount of work they can 
     handle or lack of qualifications, especially where a State 
     spends a large portion of its funds on a single large project 
     requiring special contractors.

  There has been some suggestion by those opposing the amendment that 
the Adarand case not only wasn't determinative of the race-based set-
aside in this bill, but it somehow is an isolated case. The 
Congressional Research Service has found no--I repeat no--court ruling 
after a trial where a race-based contracting program has met the 
Supreme Court test of strict scrutiny. Let me say that one more time. 
There has been an effort to portray the Adarand case as kind of an 
aberration, or actually not determinative, not really on point. The 
fact of the matter is it is just one more in a whole series of cases 
indicating that these kinds of race-based programs are 
unconstitutional. In fact, CRS has explained that Adarand conforms to a 
pattern of Federal rulings across the country, striking down race-based 
contracting programs as unconstitutional. Let me just mention some of 
them: Associated General Contractors of California v. San Francisco. 
That was in the ninth circuit. Michigan Road Builders Assoc. v. 
Milliken, which was in the sixth circuit; Groves & Sons Co. v. Fulton 
County, which was in the seventh circuit; Associated General 
Contractors of Connecticut v. New Haven; O'Donnell Construction Company 
v. the District of Columbia, in the D.C. circuit; Arrow Office Supply 
v. Detroit, a Michigan case; Louisiana Associated General Contractors 
v. Louisiana, Associated General Contractors of America v. Columbus; 
Engineering Contractors Ass'n of South Florida v. Metropolitan Dade 
County in the 11th circuit; Contractors Ass'n of Eastern Pennsylvania 
v. Philadelphia, in the third circuit; Monterey Mechanical v. Wilson in 
the ninth circuit, just last September; Houston Contractors Association 
v. Metropolitan Transit, which is in the Southern District of Texas, 
November 13 of last year, 1997.

  Quoting from the Houston Contractors case, right out of the case, the 
District Court for the Southern District of Texas, the court said:

       Because race is inescapably arbitrary, basing governmental 
     action on race offends the American Constitution.

  The court went on to say:

       Assigning governmental benefits to people by their skin 
     color does not quit being arbitrary because the advocates 
     claim that a program has a progressive purpose; a principle 
     wrong for Eugene Talmadge is wrong for Jesse Jackson.

  The court went on to say:

       Nothing about transportation depends upon the race of the 
     person--not employees, officers, taxpayers, riders, 
     suppliers, or contractors.

  It has been suggested that these are all sorts of lower court 
decisions and somehow they are off on their own or something, not 
following the mandate of the Supreme Court.
  In the Croson case, way back in 1989, the Court said that:

       . . . a generalized assertion that there has been past 
     discrimination in an entire industry provides no guidance for 
     a legislative body to determine the precise scope of the 
     injury it seeks to remedy. It ``has no logical stopping 
     point.''

  The Court went on to say:

       ``Relief'' for such an ill-defined wrong could extend until 
     the percentage of public contracts awarded to MBE's in 
     Richmond mirrored the percentage of minorities in the 
     population as a whole.
       Appellant argues that it is attempting to remedy various 
     forms of past discrimination that are alleged to be 
     responsible for the small number of minority businesses in 
     the local contracting industry. Among these the city cites 
     the exclusion of blacks from skilled construction trade 
     unions and training programs. This past discrimination [the 
     Court said] has prevented them ``from following the 
     traditional path from laborer to entrepreneur.'' [That is the 
     city talking.] The city also lists a host of nonracial 
     factors which would seem to face a member of any racial group 
     attempting to establish a new business enterprise, such as 
     deficiencies in working capital, inability to meet bonding 
     requirements, unfamiliarity with bidding procedures, and 
     disability cased by an inadequate track record.
       While there is no doubt that the sorry history of both 
     private and public discrimination in this country has 
     contributed to a lack of opportunities for black 
     entrepreneurs, this observation, standing alone, [standing 
     alone] cannot justify a rigid racial quota in the awarding of 
     public contracts in Richmond, Virginia. . . . [A]n amorphous 
     claim that there has been past discrimination in a particular 
     industry cannot justify the use of an unyielding racial 
     quota.
       It is sheer speculation how many minority firms there would 
     be in Richmond absent past societal discrimination, just as 
     it was sheer speculation how many minority medical students 
     would have been admitted to the medical school at Davis 
     absent past discrimination in educational opportunities. 
     Defining these sorts of injuries as ``identified 
     discrimination'' would give local governments license to 
     create a patchwork of racial preferences based on statistical 
     generalizations about any particular field of endeavor.

  So the Court concluded:

       The 30% quota cannot in any realistic sense be tied to any 
     injury suffered by anyone.

  So the Court said:

       We, therefore, hold that the city has failed to demonstrate 
     a compelling interest in apportioning public contracting 
     opportunities on the basis of race. To accept Richmond's 
     claim that past societal discrimination alone can serve as 
     the basis for rigid racial preferences would be to open the 
     door to competing claims for ``remedial relief'' for every 
     disadvantaged group. The dream of a Nation of equal citizens 
     in a society where race is irrelevant to personal opportunity 
     and achievement would be lost in a mosaic of shifting 
     preferences based on inherently unmeasurable claims of past 
     wrongs. ``Courts would be asked to evaluate the extent of the 
     prejudice and consequent harm suffered by various minority 
     groups. Those whose societal injury is thought to exceed some 
     arbitrary level of tolerability then would be entitled to 
     preferential classifications. . . .'' We think such a result 
     would be contrary to both the letter and spirit of a 
     constitutional provision whose central command is equality.

  The Court went on:

       There is absolutely no evidence of past discrimination 
     against Spanish-speaking, Oriental, Indian, Eskimo or Aleut 
     [Indian] persons in any aspect of the Richmond construction 
     industry. . . . It may well be that Richmond has never had an 
     Aleut or Eskimo citizen [the Court said]. The random 
     inclusion of racial groups that, as a practical matter, may 
     never have suffered from discrimination in the construction 
     industry in Richmond suggests that perhaps the city's purpose 
     was not in fact to remedy past discrimination.
       If a 30% set-aside was ``narrowly tailored'' to compensate 
     black contractors for past discrimination, one may 
     legitimately ask why they are forced to share this ``remedial 
     relief'' with an Aleut citizen who moves to

[[Page S1418]]

     Richmond tomorrow? The gross overinclusiveness of Richmond's 
     racial preference strongly impugns the city's claim of 
     remedial motivation.

  Mr. President, even if by way of some disparity study mirror this 
administration could show a finding of specific, pervasive 
discrimination in the highway contracting arena, the administration 
would still be unable to show that the ISTEA quota is narrowly tailored 
to remedy that alleged past discrimination. ISTEA and the DBE Program 
funnels not less than 10 percent of Federal highway funds to 
disadvantaged business enterprises. The Government presumes that an 
individual is disadvantaged if that individual can trace his or her 
roots to one of over 100 different countries. These countries range 
from Argentina to Spain and Portugal to Sri Lanka and Madagascar to 
Japan and to the Fiji Islands.
  Just look at the map I have to my right. If you are from one of the 
countries with a ``P'' on it--it is probably hard for people to see--
you are in the preferred group. Look at the worldwide web of 
preferences that we have created, and who can figure out this web? If 
you happen to be from these countries, you get a preference. If you 
happen to have emigrated from some other country, you do not.
  If you are so unfortunate as to be from Poland, you are out of luck; 
you actually have to compete and win on the merits. But if you are from 
Pakistan, you are in the preferred group.
  If you are from Nigeria, you are disadvantaged, but if you are from 
Algeria, you are not disadvantaged.
  If you are from Spain or Portugal, you are disadvantaged, but if you 
are from Bosnia, you are not disadvantaged.
  If you are from Israel, you are not disadvantaged, but if you are 
from Pakistan, you are disadvantaged.
  If you are from China or Japan, then you get a preference, but if you 
are from Russia, sorry, you don't get a preference.
  If you are from the Fiji Islands, it is your lucky day; you win the 
preference prize. But if you are from New Zealand or are an Australian 
Aborigine, you lose; you are not disadvantaged.
  In the Adarand case, the plaintiff explained this overbreadth problem 
to the Supreme Court. Specifically, the plaintiff's lawyers stated in 
oral argument:

       We have a situation here where a Hong Kong banker, a 
     Japanese electrical engineer, or the son of landed gentry 
     from Spain could come to Colorado Springs and . . . [run] a 
     [Disadvantaged Business Enterprise].

  And, in fact, the district court in Adarand agreed the DBE program is 
so overly broad that it violates not only common sense, but it violates 
the Constitution. Indeed, under these standards, as Senator Ashcroft 
and others have mentioned, the Sultan of Brunei would qualify as 
disadvantaged.
  By the way, let me tell you a little about our friend, the 
disadvantaged sultan. This is a man who has an estimated $40 billion 
fortune, making him the wealthiest monarch in the world. He lives in a 
sprawling palace, which you can see reflected in this picture, the 
palace of the Sultan of Brunei. This palace has 22-karat gold-plated 
mosque domes and 37 types of marble. He has 150 Rolls Royces. And if 
that is not enough, the sultan keeps his prize thoroughbred horses in 
hundreds of air-conditioned stables.
  So, the sultan could leave his estate in Brunei, forsake his Rolls 
Royces, abandon his horses in their air-conditioned stables, and then 
move to my home State of Kentucky and get a bid preference as a DBE 
over a contractor from the hills of Appalachia. Mr. President, 
something is wrong with this picture.
  In 1980, Justice Stewart poignantly explained what was wrong with 
this picture. To quote Justice Stewart directly, Congress has 
``necessarily paint[ed] with too broad a brush.''
  He said:

       In today's society, it constitutes far too gross an 
     oversimplification to assume that--

  And this was in 1980--

     every single Negro, Spanish-speaking citizen, Oriental, 
     Indian, Eskimo and Aleut potentially interested in 
     construction contracting currently suffers from the effects 
     of past or present racial discrimination. Since the . . . 
     set-aside must be viewed as resting upon such an assumption, 
     it necessarily paints with too broad a brush. Except to make 
     whole the identified victims of racial discrimination, the 
     guarantee of equal protection prohibits the government from 
     taking detrimental action against innocent people on the 
     basis of the sins of others of their own race.

  Congress has a substantial burden of ``inquir[ing] into whether or 
not the particular [entity] seeking a racial preference has suffered 
from the effects of past discrimination.''
  This is what they were talking about in the Croson case, a Supreme 
Court case.
  Again, let me quote the Supreme Court:

       The random inclusion of racial groups, that as a practical 
     matter, may have never suffered from discrimination in the 
     construction industry . . . suggests that perhaps the . . . 
     purpose was not in fact to remedy past discrimination . . . 
     The gross overinclusiveness of [a government's] racial 
     preferences strongly impugns the . . . claim of remedial 
     motivation.
       If there is no duty to attempt either to measure the 
     recovery by the wrong or to distribute that recovery within 
     the injured class in an evenhanded way, our history will 
     adequately support a legislative preference for almost any 
     ethnic, religious or racial group with the political strength 
     to negotiate ``a piece of the action'' for its members.

  Again quoting Croson.
  Or, as the Fifth Circuit Court of Appeals recently explained in 
striking down racial preferences:

       A broad program that sweeps in all minorities with a remedy 
     that is in no way related to past harms cannot 
     survive constitutional scrutiny.

  Hopwood v. the State of Texas.
  As I have explain today, the Government has placed the stamp of 
disadvantaged on a stupefying array of groups--groups and individuals 
that are not similarly situated.
  As Professor LaNoue has explained:

       Some of the groups on the presumptively eligible list have 
     been in this country since its beginning; some are very 
     recent arrivals. Some are relatively poor; some are 
     relatively affluent. Some have very high rates of business 
     formation; some are very low. Some have well-documented 
     histories of discrimination; some are virtually invisible.

  Again quoting Justice Stevens:

       The statutory definition of the preferred class includes 
     ``citizens of the United States who are [black], Spanish-
     speaking, Orientals, Indians, Eskimos and Aleuts.'' . . . 
     There is not one word in the remainder of the Act or in the 
     legislative history that explains why any Congressman or 
     Senator favored this particular definition over any other or 
     that identifies the common characteristics that every member 
     of the preferred class was believed to share. Nor does the 
     Act or its history explain why 10 percent of the total 
     appropriation was the proper amount to set aside for 
     investors in each of the six racial subclasses.

  In summary, as numerous speakers have said, the DBE program is not 
narrowly tailored. As the district court concluded in Adarand just this 
last summer, directly from the court:

       I find it difficult to envisage a race-based classification 
     that is narrowly tailored. By its very nature, such a program 
     is both underinclusive and overinclusive. This seemingly 
     contradictory result suggests that the criteria are lacking 
     in substance as well as in reason.

  Or as the Supreme Court held in Croson, a program is unconstitutional 
where ``a successful black, Hispanic or Oriental entrepreneur from 
anywhere in the country enjoys an absolute preference over other 
citizens based solely on their race. We think it obvious that such a 
program is not narrowly tailored to remedy the effects of prior 
discrimination.
  I cannot imagine how the courts would spell this one out any clearer 
for us. This program is not designed to remedy past discrimination, it 
is not narrowly tailored by any stretch of the imagination, and it is 
plainly and clearly, as the distinguished Senator from Washington so 
eloquently put it a few moments ago, not constitutional.
  Mr. President, I yield the floor.
  Mr. CHAFEE addressed the Chair.
  The PRESIDING OFFICER. The Senator from Rhode Island.
  Mr. CHAFEE. Mr. President, I know the distinguished Senator from 
Illinois wishes to speak, and I will be very brief in commenting.
  I have listened to the learned Senator from Kentucky speak this 
afternoon. He spent a lot of time on the Adarand decision. The only 
thing we ought to stress about the Adarand decision is that the Adarand 
decision was a 5-4 decision that did not find that affirmative action 
is not possible to have in our country. Indeed, I will give you a 
couple of quotes from--I like to go to the Supreme Court. I am not big 
on

[[Page S1419]]

district courts and circuit courts. Yes, they are nice, but I like to 
go to the top and see what the top people have to say. This is what 
Justice O'Connor said:

       It is not true that strict scrutiny is strict in theory but 
     fatal in fact. Government is not disqualified from acting in 
     response to the unhappy persistence of both the practice and 
     the lingering effects of racial discrimination against 
     minority groups in this country.

  Later on, Justice O'Connor stated for the majority:

       When race-based action is necessary to further a compelling 
     interest, such action is within constitutional constraints if 
     it satisfies the narrow tailoring test.

  So it can be done, and affirmative action is not unconstitutional. If 
that is the implication that is derived from the remarks of the Senator 
from Kentucky, I say it is just plain not accurate.
  Mr. BAUCUS. Mr. President, I yield 20 minutes to the very 
distinguished Senator from Illinois, Ms. Moseley-Braun.
  The PRESIDING OFFICER. The Senator from Illinois is recognized for 20 
minutes.
  Ms. MOSELEY-BRAUN. Mr. President, thank you. I rise in strong 
opposition to the pending amendment that would dismantle the Department 
of Transportation's affirmative action programs and roll back 15 years 
of gains that have been made by minority and women contractors.
  The Department of Transportation's DBE program, Disadvantaged 
Business Enterprise Program, ensures that small women- and minority-
owned companies have the opportunity to participate in the Federal aid 
highway program. It does not guarantee anything; it simply allows an 
opportunity to compete. It levels the playing field, giving small and 
women-owned businesses and minority-owned businesses an equal 
opportunity to submit winning bids. The DBE program is fair; it is 
necessary, and it works.
  This program--and let me suggest another way to look at this issue, 
Mr. President--the DBE program is no more and no less than a structural 
response to a structural distortion of our society, a distortion that 
is caused by 200 years of slavery and segregation and, frankly, the 
status of women and an age-old tradition that set women apart as 
second-class citizens as well. It responds to the unfortunate but 
obvious fact that our society was constructed on the traditional 
station of women and minorities.
  Women do not earn 75 percent of the earnings of men who have the same 
jobs because they are 25 percent less competent or because they pay 25 
percent less for food. African Americans are not proportionally poorer, 
sicker, more imprisoned, or less educated because of accident but, 
again, because of those distortions created in today's society by those 
institutional structures that were crafted centuries and decades ago.
  The DBE program addresses these underlying realities. It helps to 
weave thousands of small businesses into the fabric of our economy and 
our society. It creates for us a stronger Nation. A society that taps 
the talent of 100 percent of its people is a stronger society because 
it can draw on a broader pool of talent. A community that gives all of 
its members a chance to contribute to the maximum extent of their 
abilities is a stronger community because it benefits from a broader 
range of contributions.
  America is never so magnificent as when she reflects her nobler 
tradition. Justice and equality, opportunity based on merit and 
capacity--these are among some of the defining values of our country, 
and these values are reflected in this DBE program.
  The debate over the DBE program has so far been characterized by 
distortion of the structure and the results of the program. I have 
heard more than a few in the debate this afternoon. The facts are, it 
is a fair program that operates within the bounds of the Constitution. 
It has worked well, and it has created opportunities for thousands of 
minority- and women-owned businesses.
  I have heard a lot of conversation about the constitutionality. I 
point out, Mr. President, if you read the Constitution of the United 
States--and here is a copy. I took Senator Byrd's advice and I carry 
mine around with me. If you read article I, it is very clear that 
Americans of African descent were not citizens of this great country 
when the Constitution was written. Similarly, women were not voters of 
this country when this Constitution was written. Americans of African 
descent did not receive the rights of citizenship until the passage of 
the 14th and 15th amendments in 1868, and women were not enfranchised 
to vote in this country until this century, until 1920, with the 
passage of the 19th amendment. But ours is a living Constitution. And 
it is a Constitution that changes over time to reflect the realities of 
the community as a whole, to keep the core values as it adjusts to 
changes in the makeup and composition and demographics of the country.

  This Constitution has lived so long precisely because it responds to 
distortions in our society, precisely because it adapts itself to the 
realities of the time, and because it continues to reflect those core 
values that bring us together and make us all Americans. And the fact 
of the matter is that this legislation is constitutional, as has been 
discussed on this floor.
  In 1982, Mr. President, Congress established a national goal for at 
least 10 percent of Federal highway and transit project funds to be 
expended with small businesses owned and controlled by socially and 
economically disadvantaged people.
  In 1987, Congress extended this initiative to include women-owned 
businesses. And in 1991, the program was first included in ISTEA, which 
is, of course, the legislation that is sought to be amended today. 
President Reagan signed the 1982 and 1987 measures into law; and 
President Bush signed the 1991 legislation, again, to bring women, to 
bring minorities into the economic mainstream of our country.
  I will make one other point. This is another digression. But I have 
listened to the debate today. And even on the screen when this gets 
broadcast on C-SPAN, it says, ``Amendment re minorities.'' This 
legislation is not just about minorities, Mr. President. It is about 
women as well. And we need to make certain that every person who 
listens to this debate understands that by casting it just in terms of 
minorities, it changes the focus of the debate, it becomes a subterfuge 
for a set of buzzwords that, frankly, in my opinion, do not reflect 
well on this Senate and on this debate.
  Under the Federal DBE program, State and local governments work to 
achieve goals they set for themselves based on the ability of qualified 
disadvantaged businesses in their areas, without quotas, without set-
asides, and without penalty if they fail to meet their goals after 
good-faith efforts.
  In 1996, most States set 10 percent goals for themselves. Some States 
set higher goals, up to 14 and 16 percent. Only three States failed 
altogether to achieve their DBE goals in 1996. And only two States 
failed to reach 10 percent. Most States exceeded their DBE goals, in 
some cases by large margins.
  In my home State of Illinois, which set a 10 percent goal for itself 
in 1996, 15 percent of its highway construction funds were awarded to 
DBEs. Again, you are talking all minorities, you are talking all women. 
So you are really talking about a majority minority set-aside, if you 
think about it, because if you take women as a proportion of the 
population, you take minorities, all of them as a proportion of the 
population, what you really have is a majority of the population. 
Again, this legislation simply seeks to address a structural distortion 
in which that majority of the population participates at an unduly low 
and restrictive level of our economic activity.
  The DBE program is flexible in its work. In 1980, DBE participation 
in Federal highway construction was only 3.6 percent--again for the 
majority of the population of this country. Only 3.6 percent of the 
contracts given out by the Federal highway construction efforts were 
for DBEs.
  DBEs realized small gains over the next couple years when the 
Department of Transportation encouraged participation. Sharp gains were 
made, however, after Congress put the program into the law in 1982. DBE 
participation climbed to almost 17 percent in 1984, and it has hovered 
around 15 percent ever since.
  Now, who are the disadvantaged business enterprises? In 1996, DBEs 
again received slightly less than 15 percent of

[[Page S1420]]

the Federal-aid highway construction money. Of that small slice, again, 
here we are--14.8 percent. This is everybody. These are women, 
minorities, Hispanics, Asians, Native Americans --these are all the 
majority minority of the population that is described as ``minorities'' 
in the debate. They got all of 14 percent of Federal highway spending.
  Remember, we are all taxpayers now. Everybody is in the pool putting 
money in to make this happen, but 14 percent went out to women- and 
minority-owned businesses in 1996. And 85 percent went to the 
traditional white male business owners.
  Now that is just the reality. This is not about taking anything away 
from anybody. But it has to be said, and in very clear terms. Here is 
everybody else. This is the traditional economics. This is a reflection 
of an attempt to address a distortion in our society that comes out of 
the tradition of excluding women and minorities. The exclusions are no 
longer there, but inclusion has not yet happened. Integration has not 
yet happened. And that is why this debate is so vitally important.
  Let us take a look for a moment at the division within this 14.8 
percent. African Americans are 14 percent of the 14 percent. Native 
Americans are 9 percent of the 14 percent. Asian Americans are 3 
percent; Asian Pacific, 3 percent of the 14 percent; Asian Indian, 3 
percent of the 14 percent. And we are not talking about the Sultan of 
Brunei either. He is not involved with any of this. We are talking 
about citizens of this great country. Hispanic Americans, 20 percent of 
this 14 percent. But look at this, Mr. President, 51 percent--51 
percent--of this 14 percent are women-owned businesses.
  I ask the question why 50 percent of the conversation that has been 
going on this afternoon has not talked about the impacts on women that 
this repeal, if it is successful, will cause?
  So the DBE program then redresses gender discrimination as much as it 
does lingering racial imbalances. It provides economic opportunities 
for businesses and entrepreneurs who would otherwise be shut out of the 
construction industry. I have received a number of letters from DBEs 
urging me to oppose this effort to repeal the program, letters from 
women and minorities who own and operate small business, small 
construction firms in all corners of Illinois.
  Their letters ask for the continued opportunity to compete. They 
drive home the point that the DBE program is not about taking contracts 
away from qualified male-owned businesses and handing them to 
unqualified female-owned firms. The program is not about denying 
contracts to Caucasian low-bidders in favor of higher bids that happen 
to have been submitted by Hispanic or African Americans or Asians or 
women.
  Instead, this program is about creating a climate of competition that 
brings everybody in. That is what all these business owners in Illinois 
want, the opportunity to compete. They want a level playing field in 
which to make the case that they can do the best job for the taxpayers 
for the least amount of money. They just want a fair chance.
  Listen to a letter from Sharon Arnold, who is president of SSACC, 
Inc., a certified women-owned disadvantaged business enterprise in 
Pontiac, IL:

       I know that without the [DBE] program I would lose the 
     opportunity to compete. That is all this program does for me; 
     it gives me the opportunity to compete.

  Ms. Arnold started her construction firm in 1986, the year before 
Congress added women to the DBE program. She writes that at the time 
``I was certain I had made the biggest mistake of my life. Contractors 
who I had been working with in the bidding process [as a former 
employee at another construction firm] had no interest [at all] in what 
I was trying to accomplish . . . Now, the reality is, they still don't 
care unless my . . . prices are the lowest. In this program competition 
is the name of the game.''
  Mr. President, that is the basic concept of the DBE program. Low bids 
still get the contracts. The program does not create special 
preferences for more expensive or less qualified bidders. It does not 
increase the cost of highway construction.
  The General Accounting Office has in fact examined this issue and 
concluded that the program results in less than a 1 percent increase in 
construction costs--1 percent, Mr. President--to begin to correct some 
structural distortions that everybody here in this room and certainly 
everybody in this country knows we have to be able to correct and 
resolve.
  All the DBE program does is open doors. Again, listen to Victor 
Wicks, President of Wicks Construction Services in southern Illinois. 
This is a man.

       The DBE program is an economic development program for both 
     minority- and women-owned businesses. The program merely 
     levels the playing field for minorities and women and affords 
     them an equal opportunity to compete for federal construction 
     dollars. . . . All we are asking for is a fair chance--an 
     equal opportunity--a level playing field, for all Americans.

  That is what the DBE program provides for Mr. Wicks and the rest of 
the thousands of qualified disadvantaged businesses across this 
country.
  Mr. President, there has been some debate over whether the DBE 
program is constitutional in light of the Supreme Court decision in the 
case of Adarand Constructors v. Pena. Some of my colleagues have 
asserted that the Senate must ``bring ISTEA into compliance with 
Adarand and the Constitution.''
  The fact is, the Senate need not do anything except extend current 
law in order to keep ISTEA in compliance with Adarand and the 
Constitution. The DBE program was not declared unconstitutional. On the 
contrary, the Supreme Court wrote the Federal Government must subject 
affirmative action programs to ``strict scrutiny,'' meaning that the 
programs must be ``narrowly tailored'' to meet a ``compelling 
government interest.''
  The Court, in fact, explicitly stated that affirmative action is 
still a necessary function of our Government. And it wrote:

       The unhappy persistence of both the practice and the 
     lingering effects of racial discrimination against minority 
     groups in this country is an unfortunate reality, and the 
     government is not disqualified from acting in response to it.

  Mr. President, the ``lingering effects of racial discrimination'' of 
which the Court spoke are exactly the distortions in our society that I 
referenced earlier. Racism and sexism are indeed unhappy, but still 
very real, phenomena in our society. The DBE program is one of our 
responses to those lingering effects, and it works.
  Anyone who thinks there is not a ``compelling government interest'' 
to justify the DBE program need only to look at the States that do not 
have them in place for their State-funded highway construction 
programs.
  Data from these States provide side by side comparisons of two 
construction programs within each State--the Federal-aid highway 
program, which includes a DBE initiative; and those States' own highway 
programs for non-Federal-aid highways, which do not include DBE 
programs.
  I want you to consider the following examples from fiscal year 1996.
  In Arizona, DBEs received only 3.8 percent of State-funded highway 
construction dollars, State funded. They received 8.9 percent of the 
Federal-aid highway program. Again, DBE exists here; it does not exist 
there.
  In Arkansas, 2.9 percent of State dollars; 11.9 percent of Federal 
dollars. DBE program here; did not exist there.
  In Delaware, DBEs received less than 1 percent--less than 1 percent 
of State-funded highway construction dollars, while they received 12.7 
percent of the Federal-aid highway funds in that State.
  The next one, the DBEs in Louisiana received only .4 percent --.4 
percent--of funds under the State's highway construction program, which 
does not include a DBE initiative. They received 12.4 percent of funds 
awarded by the Federal program.
  In Michigan, another State without a DBE program, DBEs received only 
1.4 percent of State highway construction funds. By contrast, they 
received 15 percent of Federal highway construction funds.
  I can go through Missouri, Nebraska, Oregon--Rhode Island, look at 
this. In Rhode Island we have the State program without a DBE program, 
and the State effort is zero percent for all the women and minorities 
put together. Zero percent of the State highway construction funds; 12 
percent of the Federal highway construction funds where there was a DBE 
program.

[[Page S1421]]

  Now, this evidence, Mr. President, is incontrovertible. Where there 
are no DBE programs, women- and minority-owned small businesses are 
shut out of the highway construction. The Federal DBE program serves to 
redress the inequality and redress the unfortunate fact that all across 
the country women and minorities would not otherwise have access to 
construction contracts.
  Now, consider another example--the State of Michigan. In the second 
quarter of fiscal year 1989, the State of Michigan awarded 5 percent of 
its highway construction funds to small and minority-owned businesses, 
and 9.9 percent to small women-owned businesses. Again, I make the 
point that this debate has been focused on minorities, but it is women 
that are just as much at risk from this amendment as minorities. Near 
the end of that quarter, the State ended its DBE program. OK. Here we 
are right here. So 9.9 percent, 5 percent. Then the end of the program. 
Within 6 months, by the fourth quarter of that same fiscal year, 
minority disadvantaged businesses were completely shut out of the 
State's highway construction program. Less than 1 percent--.6 percent. 
They received zero contracts. By the first quarter of the following 
year, women were down to only 1.7 percent of the State's highway 
programs, down from 9.9 percent.
  So this was the experience. Look at this. Here we go. Just totally 
wiped out from the modest gains that had been made in that State.
  Well, Mr. President, that is exactly what would happen if we ended 
the Federal DBE program. Women- and minority-owned small construction 
companies would go out of business by the hundreds of thousands.
  I have to ask the question, is that really the result we want to have 
coming out of this debate? Is that really the legacy that the 105th 
Congress would like to impart on transportation policy--a legacy of no 
economic opportunity for thousands and thousands of small businesses?
  Nationwide, minorities represent 9 percent of all construction funds 
but receive only about 5 percent of all business receipts. That is 
overall--9 percent of all funds but 5 percent of all receipts. Women, 
who own one-third of all firms, get only 19 percent of business 
receipts. Let us not see 1998 go down as the year in which those 
opportunities to compete were further eroded.
  I urge all of my colleagues to consider the facts--the fact that the 
DBE Program is constitutional, that it is a program of economic 
opportunity, that it is a program of fairness, and that it is a program 
that works. I urge my colleagues to cast their votes for the ideals of 
opportunity and equality, which describe our Nation, which are 
described in this Constitution, in this living document.
  More to the point, Mr. President, I urge my colleagues to move beyond 
the politics of division and zero-sum games. Those who oppose having 
this modest opportunity provided for women and minorities--this modest 
step to correct a structural distortion that has existed in our country 
since its founding, this tiny step to bring women and minorities into 
the economic mainstream and to integrate the business of our country--
those who would oppose that are pushing buttons to divide Americans; to 
pit one against the other; to say this is a zero-sum game, you can't 
progress, you can't be integrated in this society without someone 
losing out. No one loses out in this program. No one loses out from 
opening up the doors of opportunity.
  Indeed, opportunity to compete, to have a level playing field, to 
move beyond race and gender, is what this country has got to be about. 
I urge my colleagues to reject this ill-considered amendment.
  Mr. McCONNELL. I yield to the distinguished Senator from Michigan 
such time as he may need.
  Mr. ABRAHAM. Mr. President, I rise to discuss the amendment of the 
Senator from Kentucky to the ISTEA legislation. Mr. President, the 
Supreme Court decision in Adarand v. Pena appears to mean that section 
1111 of the existing ISTEA legislation is unconstitutional. That being 
the case, it is our duty, in my view, to replace this provision with 
one that meets the test of constitutionality.
  In its Adarand decision, the Supreme Court held that programs that 
create race-based preferences must be narrowly tailored to further a 
compelling governmental interest. On remand, the Federal District Court 
determined that the presumption of social and economic disadvantage on 
account of race included in an earlier version of ISTEA section 1111 
violated the equal protection clause of our Constitution. This 
provision of our Constitution has been crucial to the ongoing struggle 
for civil rights in this country. It has been behind a number of 
important Supreme Court decisions dating back to the seminal Brown v. 
Board of Education.
  The Adarand Court continued a long tradition of jurisprudence, 
establishing a colorblind Constitution, one which demands equal 
treatment under the law for members of all races. In acting, the Court 
has drawn a clear distinction between preference or quota programs and 
affirmative action efforts aimed at providing more opportunity for the 
less advantaged.
  In my view, Mr. President, this is a crucial principle and 
distinction, one that will not allow the Government to give preference 
to one individual over another simply on account of status--absent 
direct evidence of past discrimination that the program is narrowly 
tailored to address--but does permit us to provide special assistance 
to those economically disadvantaged.
  But our Constitution's principle of equality under the law must not 
be allowed to conflict in any way with outreach programs aimed at 
helping the economically disadvantaged of our society. Indeed, it 
points to public policies more in keeping with America's constitutional 
heritage, our commitment to fair play, and our desire to help the 
disadvantaged become full participants in our market economy and the 
prosperity it provides.
  To that end, Mr. President, I believe that Senator McConnell's 
amendment to the ISTEA legislation is potentially helpful. This 
amendment would strike section 1111 from the legislation on the basis 
that the changes between the language in this ISTEA and the version 
deemed unconstitutional by the District Court based on the Supreme 
Court's Adarand ruling are not sufficient to overcome the Court's 
constitutional objections. I wish to state that while I realize there 
is a difference of opinion on this issue, I agree with this 
constitutional analysis. The amendment would replace section 1111 with 
a requirement that every State in receipt of Federal highway dollars 
engage in ``emerging business enterprise development and outreach.'' 
Under the language, ``emerging enterprises'' are defined as contractors 
whose average annual gross receipts do not exceed $8.4 million over a 
period of 3 years. To be eligible, the businesses also must be small 
businesses that have been in existence for not more than 9 years.
  Under this amendment, States would be called on to provide a number 
of services to emerging businesses, including periodic review of 
construction plans to ensure fairness and opportunity, as well as 
offering seminars, compiling and publishing lists of interested 
businesses and related companies, and providing networking 
opportunities on a regular basis.
  The McConnell amendment offers significant outreach programs aimed at 
emerging businesses. By so doing, it aims Government assistance at 
those who need it most. In the process, it avoids rewarding well-to-do 
businesses simply on account of status, while providing assistance to 
minorities and women truly in a position to need and make use of it.
  In addition, Mr. President, I thank Senator McConnell for accepting 
my language in modifying his amendment. That language directs States to 
also aim efforts at business enterprises that are located in 
economically distressed communities and employ a majority of their 
workers from such economically distressed communities.
  Finally, Mr. President, the McConnell amendment is constitutional. 
Because it does not base the awarding of Government contracts or 
benefits exclusively on the race of the recipients, it upholds the 
principles of our Constitution and the equal protection clause in 
particular. Support for this amendment is fully in keeping with our 
sworn duty to uphold the Constitution on which our Government is based.
  However, Mr. President, in my view, the McConnell amendment does not 
go far enough. We must do more. I continue to believe, in other words, 
that

[[Page S1422]]

economic empowerment initiatives are crucial to the well-being of 
disadvantaged members of our society, and in the end, to our society as 
a whole.
  It was in order to promote these efforts that I joined a number of my 
colleagues, including the Presiding Officer, in forming the Renewal 
Alliance, an alliance dedicated to renewing the families and 
communities which lie at the heart of our way of life and which are 
crucial for success in America.
  To further these efforts, we have formulated legislation aimed at 
creating ``renewal communities.'' In these communities, targeted, pro-
growth tax benefits, regulatory relief, brownfields cleanup, and 
homeownership opportunities will combine to produce jobs, hope, and a 
sense of community. By targeting distressed communities for Federal 
relief from onerous rules and taxes, we can assist the ongoing revival 
of our inner cities by spurring growth and productive rebuilding 
efforts.
  In order to become a renewal community, a community must meet several 
criteria to qualify:
  First, it must need the assistance. According to the legislation we 
have drafted, this means that the area must first be eligible for 
Federal assistance under section 119 of the Housing and Community 
Development Act of 1974. Second, it must have an unemployment rate of 
at least 1\1/2\ times the national rate. Third, it must have a poverty 
rate of at least 20 percent. And finally, at least 70 percent of the 
households in the area must have incomes below 80 percent of the median 
income of households in the metropolitan statistical area.
  In addition, state and local governments must enter into a written 
contract with neighborhood organizations to do at least five of the 
following:
  (a) reduce tax rates and fees within the ``renewal community;''
  (b) increase the level of efficiency of local services within the 
renewal community;
  (c) formulate and implement crime reduction strategies;
  (d) undertake actions to reduce, remove, simplify, or streamline 
governmental requirements;
  (e) involve private entities in providing social services;
  (f) allow for state and local income tax benefits for fees paid or 
accrued for services performed by a non-governmental entity but which 
formerly had been performed by government; and
  (g) allow the gift (or sale at below fair market value) of surplus 
realty in the renewal community to neighborhood organizations, 
community development corporations or private companies.
  Third, the community must agree to suspend or otherwise not enforce 
the following types of restrictions on entry into business or 
occupations;
  (a) licensing requirements for occupations that do not ordinarily 
require a professional degree;
  (b) zoning restrictions on home-based businesses that do not create a 
public nuisance;
  (c) permit requirements for street vendors that do not create a 
public nuisance;
  (d) zoning or other restrictions that impede the formation of schools 
or child care centers; or
  (e) franchises or other restrictions on competition for businesses 
providing public services including but not limited to taxicabs, 
jitneys, cable television and trash hauling.
  State and local authorities may apply such regulations on businesses 
and occupations within the renewal communities as are necessary and 
well-tailored to protect public health, safety and order.
  Now, in return for its reforms, Mr. President, the community will 
receive a number of renewal benefits.
  First, a capital gains tax rate of zero for the sale of any qualified 
zone stock, business property or partnership interest held for at least 
five years.
  Second, increased expending for purchases of plant and equipment in 
the community.
  Third, a 20 percent wage credit for local businesses hiring 
qualified, low income workers who remain employed for at least 6 
months.
  Fourth, a provision allowing taxpayers to expense costs incurred in 
cleaning up contaminated sites within the zone.
  Fifth, a provision allowing financial institutions to receive 
Community Reinvestment Act credit for investments in, or loans to, 
community groups within the zone. These groups would then provide loans 
and/or credit to local small businesses.
  All of these provisions would encourage investment and job creation 
within the zone. In my view, this approach, as opposed to the existing 
preferences structure, or the McConnell approach standing alone, is the 
way to go.
  Accordingly, Mr. President, while Senator McConnell's amendment is, 
in my view, part of the answer to our challenge of providing all 
Americans the economic opportunity they deserve, it is not enough.
  It can, and in my view should, be part of a larger program aimed at 
helping all Americans rebuild the community institutions which alone 
can provide the support and training people need to succeed in our 
competitive world marketplace.
  Thus, if the motion to table the Amendment fails, I will attempt to 
augment it with a broader package of economic empowerment proposals as 
outlined above.
  In addition, should the McConnell Amendment pass, I reserve the right 
to offer amendments making certain specific modifications to the 
language in this amendment.
  That language would specify that state and federal outreach and 
dollars under USTEA shall be directed toward emerging business 
enterprises located in and/or employing the majority of their workers 
from ``targeted areas.'' A targeted area is defined as a community 
meeting the same criteria regarding poverty rates and so on necessary 
to be deemed an empowerment community. This will concentrate our effort 
where they are most needed and can provide the greatest benefit.
  I appreciate the opportunity to speak on these issues today, and I 
look forward to hearing the rest of this debate. I also look forward to 
proceeding further in this area--whether in the context of this 
legislation or at a future point this year--because I think that the 
ideas which I have tried to outline, and which our Renewal Alliance has 
been working on, must be part of a broader approach and a broader set 
of solutions we are responsible for bringing to the American people.
  Mr. McCONNELL. If I could take a moment to thank the distinguished 
Senator from Michigan for his important contribution and the thought 
that he and the occupant of the chair have put into their proposal. I 
think is a very important contribution.
  Mr. ABRAHAM. Thank you.
  Mr. BAUCUS. I yield 10 minutes to the distinguished Senator from 
Virginia.
  The PRESIDING OFFICER (Mr. Coats). The Senator from Virginia.
  Mr. ROBB. Mr. President, I rise to support the Disadvantaged Business 
Enterprise Program and oppose the amendment of the Senator from 
Kentucky which would eliminate it.
  This amendment, at least, implies that there is something wrong with 
supporting socially and economically disadvantaged businesses. I see 
nothing wrong with supporting socially and economically disadvantaged 
businesses. I believe it is entirely appropriate we do whatever we can, 
legally, to help small businesses flourish, businesses that might 
otherwise get swamped by larger, better financed competitors.
  Mr. President, it is a sad fact that as we near the end of this 
century, socially and economically disadvantaged businesses tend to be 
minority owned. If we don't focus our attention on helping these 
businesses succeed, we are never going to achieve the dream of an 
economically colorblind society. The evidence of this, regrettably, is 
compelling and disturbing. White-owned construction firms receive 50 
times as many loan dollars as African American-owned firms that have 
identical equity.
  Where DBE programs at the State level have been eliminated, 
participation by qualified women and qualified minorities in government 
transportation contracts has plummeted. There is no way to know whether 
this discrimination is intentional or subconscious, but the effect is 
the same. This experience demonstrates the sad but inescapable truth 
that, when it comes to providing economic opportunities to women and 
minorities, passivity equals inequality.
  If we don't exercise diligence, we are going to stifle businesses 
owned by

[[Page S1423]]

qualified women and minorities. It is that simple.
  I do not support numerical quotas and I never have. I would never 
advocate awarding work to anyone who is, or any business that is 
unqualified for the task. But I do support lending a helping hand to 
individuals and businesses that, without special attention, might be 
overlooked, even though they are perfectly capable of performing the 
necessary work.
  And that, Mr. President, I believe is the key to eliminating 
discrimination over the long-term. We cannot simply declare that a 
world where inequality exists is otherwise an equal world. We need to 
recognize that inequality and address it by making an affirmative 
effort to give qualified businesses a realistic chance to participate.
  As Julian Bond remarked recently in a sentiment that I think is right 
on mark in this case:

       Affirmative action isn't a case of unqualified people 
     getting a leg up, but of qualified people getting an 
     opportunity.

  Finally, I would like to commend the managers of the bill and, in 
particular, my colleague from Virginia for taking a courageous stand to 
support the DBE, despite the pressure that I am sure he is getting on 
this particular issue.
  Mr. President, the managers are on the right side of this particular 
issue, and I urge my colleagues to support them by opposing this 
amendment.
  With that, I yield the floor.
  The PRESIDING OFFICER. Under the previous agreement, the Senator from 
New Mexico is recognized to speak for up to 45 minutes, if he so 
chooses.
  Mr. DOMENICI. Mr. President, if somebody needs 5 minutes or so; I am 
awaiting a document that I need for my remarks.
  Mr. BAUCUS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I yield myself 5 minutes.
  Mr. President, I want to ruminate about this concept of quotas and 
goals. First of all, nobody likes quotas. They are rigid, they are 
unforgiving, they are almost insulting. The DBE program does not use 
quotas; it uses goals.
  Now, some say the goal is 10 percent, 15 percent, or 20 percent, or 
what not; so is it really a goal? To be honest with ourselves here, it 
is a goal, but it does have a number associated with it. For example, 
the number is 10 percent. Some States ask for a lower goal--not a 
quota, but a lower goal. Some States are granted those lower goals. 
Some States ask for higher goals and they are granted those higher 
goals. Some States say, ``Our goal is going to be 10 percent,'' and lo 
and behold, it turns out that the disadvantaged business enterprise 
program does not meet 10 percent, it is a lower percent. That has 
happened in a couple of States. In 1996, in Arizona and in Alaska, the 
goal was 10 percent, but those two States did not reach the 10 percent 
goal. In Alaska, it was 8.6 percent. In Arizona, it was 8.9 percent. 
You might ask: What happened? Why didn't those States meet their goals? 
As far as I know, nothing has happened, which is further evidence that 
this is not a quota; it is just a goal.
  We all know that goals are important. We know that if we want to 
achieve something, it is good to have a goal. If you don't have goals, 
often we slip, we rationalize, and things fall between the cracks and 
they don't happen. Sometimes it is helpful to have numerical dates or 
to quantify your goals, again, to help assure that you reach them, like 
benchmarks. We all know that sometimes quantifying a goal helps make it 
happen. In this case, we are not talking about a rigid goal. It is a 
goal that has a lot of flexibility to it in a lot of different ways.

  I was a bit bemused when I heard Senators chafing at this concept of 
goals, I guess the same way Senators resist unanimous consent 
agreements. A unanimous consent agreement is a kind of a goal. It is a 
statement that, within 2 hours we are going to vote or something, or 
within an hour and a half we are going to do something else. We have to 
have limits sometimes to make something happen. Look at newspapers. 
Newspaper reporters know they have a deadline to get the paper out.
  So if we do want greater inclusion of minority groups participating 
in highway contracting, and if we want more women enterprises to 
participate in highway contracting, it is good to have a goal to help 
make that happen. That is what we are attempting to do here. It is not 
unconstitutional because it is very flexible. It has a lot of give. I 
might say that the proposed regulations that the Department of 
Transportation is working on and, in fact, will probably finalize in a 
couple of months, make the program even more narrowly tailored. For 
example, the regulations include further emphasis on good-faith 
efforts. All a contractor has to show is good faith, not a numerical 
number. Also in the proposed regulations is a broad waiver allowing 
States to come up with their own program that will replace the 
Department of Transportation's program if the State can show that its 
own program will effectively redress discrimination. That is a broad 
waiver.
  In addition, the proposed regulations would add a net worth cap. That 
is, if your net worth exceeds a certain amount, you are not eligible, 
even if you are a woman or a minority. So all those statements about 
the Sultan of Brunei are irrelevant. The proposed regulations make it 
very clear that the Sultan of Brunei, with all his palaces and gold-
plated Rolls Royces, and so forth, would not even begin to be eligible 
for the DBE Program. I might say that it is not only the Sultan of 
Brunei; it is a bunch of other folks whose net worth is significant and 
who should not be part of the DBE Program.
  So the basic point is, again, that this is very narrowly tailored, it 
is flexible, it is based on good faith efforts. It is not a quota. And 
the proposed regulations will be even more flexible and narrowly 
tailored, with more emphasis on good-faith effort.
  The PRESIDING OFFICER. Who yields time?
  The Presiding Officer had earlier recognized the Senator from New 
Mexico to speak under a previous agreement, if he is prepared to do so.
  Mr. DOMENICI. Mr. President, I yield 5 minutes of my time--although 
he may have a different view than I have--to Senator Brownback.
  The PRESIDING OFFICER. The Senator from Kansas is recognized to speak 
for 5 minutes.
  Mr. BROWNBACK. I thank the Senator from New Mexico.
  Although I think our views of the world are similar on many issues 
and actually quite a bit similar on this particular issue, we end up 
coming at it, in the end conclusion, a bit differently. I appreciate 
the Senator from New Mexico yielding me 5 minutes for this purpose.
  Mr. President, the Senate will soon vote, of course, on an amendment 
proposed by the Senator from Kentucky on the ISTEA bill. As the bill 
stands, it mandates that ``not less than 10 percent'' of Federal 
highway and transit funds may be allocated to ``disadvantaged business 
enterprises.''
  I want to speak specifically about this amendment that does away with 
racial set-asides and replaces it with an outreach program to emerging 
small businesses. I have really struggled with this vote. I find this a 
very difficult issue, not because I support quotas or because I believe 
racial set-asides will help bring about racial reconciliation, which is 
really my point of view and my difficulty with this because we 
desperately need racial reconciliation in this country. We need that to 
take place. We need that process to start in earnest, to move forward 
with the hearts and souls of people in this country. My problem is that 
I don't think quotas and set-asides alleviate the disadvantages many 
Americans face or to increase their ability to compete on a level 
playing field, nor do I really believe it is going to help us out with 
this racial reconciliation that our country so desperately needs.

  Nevertheless, this has been a hard decision to make. It will be a 
hard vote to cast. I would like to explain why I will vote in favor of 
Senator McConnell's amendment and why I have misgivings about doing so.
  First, I believe that quotas are unconstitutional. Each of us, in 
serving in this body, has taken an oath to uphold the Constitution. The 
Supreme Court's ruling in Adarand is very clear. I took my oath of 
office to uphold the Constitution seriously. I could not, in good 
conscience, vote for a measure that I believe, and the Court has ruled, 
violates the highest law of this land.

[[Page S1424]]

  Second, I do not think quotas are the answer to the problems that 
divide us and deny equal opportunity. Quotas do nothing to address the 
problems that we face as a country, of not having a colorblind society. 
Indeed, it actually perhaps makes us more aware of the differences, 
rather than less aware of the differences. It doesn't address some of 
the underlying problems such as the break-up of families, which is the 
single greatest predictor of opportunities and income later in life--
coming from a solid family that cares and loves the children. Quotas do 
not help the millions of children who attend schools where violence is 
commonplace and drug use is rampant. They do not help children to read, 
write, do arithmetic, or have the basic skills in society that we are 
having so much trouble with.
  Finally, I believe that set-asides are not only ineffective in 
bringing about racial reconciliation--this is my key point; I don't 
think they bring about racial reconciliation. Indeed, I think they have 
been counterproductive. The last several years have shown that quotas 
in some cases, indeed many, are an acid that further divides our Nation 
and corrodes the principles of equality. More than 30 years ago, Dr. 
Martin Luther King, Jr., shared his dream of a society where men and 
women would be judged ``on the content of their character, not the 
color of their skin.'' We all, as a country, saw those words as 
electric and true. This is a dream that almost all Americans continue 
to share--that we be judged on the content of our character, not on the 
color of our skin. Although we may disagree on the best means of 
getting there, I cannot believe that the best way to achieve a 
colorblind society is to call more attention to race, to count by race, 
and to divide by race.
  That said, the reason I have struggled with this vote is I believe 
that it is incumbent upon us to open the doors of opportunity to all 
and reach out to those Americans who have been denied those 
opportunities. Unfortunately, the way this debate has been spun, a vote 
for quotas has been equated to show concern for the disadvantaged--a 
portrayal both false and destructive, I think. We need to do more to 
extend a helping hand to those in need and to open the doors of 
opportunity and not only level but expand the playing field for all 
Americans.
  The Senator from Michigan has spoken and the Senator presiding, the 
Senator from Indiana, has spoken frequently about initiatives of the 
Renewal Alliance. I want to draw my colleagues' attention to these 
efforts. I think this is a serious effort at reaching out and truly 
showing that the way to racial reconciliation is to truly level the 
playing field and to expand the playing field in the areas where we are 
having the most opportunity. So the work in the inner cities and the 
work of the Renewal Alliance has been key in that.
  I think this work of the Renewal Alliance is critical because, as I 
have struggled with this debate--and the reason I have struggled with 
this vote is not because I believe quotas are the answer, because they 
just are not, they are not constitutional--is that if we don't have a 
colorblind society, what do we go to if we don't think quotas are right 
or constitutional? Then what? I don't think we have answered that 
question yet in this body. How do we address the needs to create a 
colorblind society? That is where I think the Renewal Alliance is 
reaching out and doing that and saying, here are some ways we can truly 
develop in inner cities, and reach out and say: We care, we want these 
places, we want you to have opportunity and growth and hope. It is just 
that we aren't going to do it by acid tests that we have talked about 
in these quotas and that we can really reach Martin Luther King's 
vision of a colorblind society if we try to bid out and to reach out 
and to hold.

  I ask my colleagues to look at the work of Senator Coats from Indiana 
and other people that have truly put their hearts into this and said, 
here is a way we can go, this is what we can do, this is not 
constitutional quotas. It is just not going to be. But this is what we 
can do, and let's do that, and let's reach out as Americans and bind 
arms together, of all creeds, of all kinds, of all races, of all 
religions, and make a bigger, better playing field in this country.
  That is why, Mr. President, I will be voting for this amendment. It 
is a difficult vote. And I really hope and pray that we will revisit 
this issue along the lines of what has been put forward as a way of 
expanding the hope and opportunity.
  With that, I yield the floor.
  Mr. McCONNELL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. Mr. President, if I could just have one moment to 
thank the Senator from Kansas for his important contribution to this 
debate, and thank him for his support.
  The PRESIDING OFFICER. Under the Senate agreement, the Senator from 
New Mexico is recognized.
  Mr. DOMENICI. Mr. President, thank you, very much.
  Mr. President, I rise today in opposition to the Amendment offered by 
the Senator from Kentucky, Mr. McConnell. The Senator from Kentucky 
proposes to replace the Department of Transportation's Disadvantaged 
Business Enterprise (DBE) program with a new ``emerging business'' 
program. The amendment is intended to eliminate the DBE program and 
would have a devastating effect on the opportunities for DBE's to 
participate in federally funded highway and transit projects.
  The proponents of this amendment urge Senators to vote for this 
amendment by saying that it is incumbent upon the Senate to bring ISTEA 
into compliance with the Supreme Court's ruling in Adarand versus Pena. 
They assert that just this summer, after the Supreme Court sent the 
case back to the District Court, that it found the DBE program was 
unconstitutional. Furthermore, they declare that the District Court in 
Colorado followed the Supreme Court's lead and found that the 
government, in fact, could not meet the Supreme Court's test.
  The proponents go on to remind Senators that every member of Congress 
has publicly and solemnly sworn to support and defend the Constitution 
of the United States, and that we now have little choice but to comply 
with the unambiguous, unequivocal mandate of the courts and end the DBE 
program.
  If Senators are considering voting in favor of the McConnell 
amendment on the basis that the program has been ruled 
unconstitutional, and that it is now incumbent upon us to bring the 
program into line with the Supreme Court's rule, then I would ask them 
to take the time to listen to a different view, and one that I believe 
is closer to the real facts.
  The proponents of this amendment make the argument that we should 
stand for the rule of law and on this point we agree. However, many 
Senators will be interested to know that the District Court itself 
appears not to have followed the rule of law as outlined by the Supreme 
Court and therefore should not be mislead. I will say this again, 
because if you listen to the proponents of the amendment, and I have, 
you are compelled to consider their argument seriously. But if you look 
at the facts closely, you will find that the very constitutional rule 
of law the proponents ask us to uphold was itself not precisely 
followed by the District Court.
  In 1995, in Adarand, the Supreme Court did not find the DBE program--
or any other affirmative action program--unconstitutional. In fact, 
seven of nine Justices upheld the constitutionality of affirmative 
action and its continued need in certain circumstances. Instead, the 
Supreme Court established a new standard of review--``strict 
scrutiny''--for federal programs using race conscious measures. This 
new two pronged test requires that affirmative action programs are 
``narrowly tailored'' to meet a ``compelling governmental interest.'' 
Without deciding whether the DBE program met this new strict scrutiny 
test, the Supreme Court sent the case back down to the District Court 
for consideration in lieu of its holding.
  Mr. President, this is the rule of law the Supreme Court said must be 
followed, and it is the rule of law I would urge Senators to support. 
However, it is not the rule of law that the District Court followed on 
remand from the Supreme Court, and that is why the District Court's 
finding that the program is unconstitutional should be viewed with 
skepticism.
  On remand, the District Court accepted Congress' determination that

[[Page S1425]]

there was a compelling need for the program. The District Court stated, 
``I find on the record before me, Congress had sufficient evidence, at 
the time these measures were enacted, to determine reasonably and 
intelligently that discriminatory barriers existed in federal 
contracting . . .  I conclude Congress has a strong basis in evidence 
for enacting the challenged statutes, which thus serve a compelling 
governmental interest.'' This meets the compelling governmental 
interest prong of the Supreme Court's ``strict scrutiny'' test.
  The District Judge, however, decided that the program was not 
sufficiently narrow in its scope. In this part of his decision, the 
Judge took a position which directly contradicts the Supreme Court's 
rule in Adarand.

  While seven of nine Justices of the Supreme Court said that there 
could be affirmative action programs that are both narrowly tailored 
and meet a compelling governmental interest, this District Court Judge 
found, and I quote, ``Contrary to the Court's pronouncement that strict 
scrutiny in not `fatal in fact,' I find it difficult to envisage a 
race-based classification that is narrowly tailored.''
  Obviously, Mr. President, the key words in the District Court's 
ruling are ``Contrary to the Court's (meaning Supreme Court's) 
pronouncement. . .'' I agree with the proponents of this amendment that 
every member of Congress took an oath to support and defend the 
Constitution of the United States, and we should be vigilant in 
adhering to that oath. But, the fact of the matter is that the District 
Court itself does not view the constitutional rule the Supreme Court 
set in Adarand as being able to be followed because it found that it 
would be difficult to envisage any affirmative action program that 
could be narrowly tailored. The Supreme Court said that it could 
envision a program that was both narrowly tailored and furthered a 
compelling governmental interest, and herein lies the flaw in the 
argument of the proponents of the amendment. On this point, Justice 
O'Connor, writing for the majority stated, ``We wish to dispel the 
notion that strict scrutiny is strict in theory, but fatal in fact. The 
unhappy persistence of both the practice and the lingering effects of 
racial discrimination against minority groups in this country is an 
unfortunate reality, and government is not disqualified from action in 
response to it.''
  The very District Court ruling that the proponents ask us to rely on 
is currently being appealed by the Department of Transportation and the 
Department of Justice in the 10th Circuit Court of Appeals. The case 
has been fully briefed, but no date has been set for oral argument. So 
while the proponents suggest that a decision on this matter has been 
fully resolved by the courts and constitutes a mandate that we should 
follow, the fact is that it is still an open question.
  Furthermore, Mr. President, although the District Court found that 
the scope of the program was not narrowly tailored, it did not take 
into account the changes that the Department of Transportation has 
proposed to the program to respond to the Supreme Court's narrow 
tailoring guidelines. The Department of Transportation has issued a 
proposed rule to improve the DBE program and respond to the Adarand 
decision. The proposed rule is specifically designed to meet the narrow 
tailoring requirement of the Supreme Court's strict scrutiny test.
  Specific narrow tailoring proposals include: Ensuring that specific 
goals are set to correspond to the availability of qualified DBEs in a 
given market. The new goal-setting methods will ensure that DBEs 
receive the same opportunities they would have but for the presence of 
discrimination--no more, no less. Giving priority to race neutral 
measures, such as outreach and technical assistance, in meeting overall 
goals. Recipients would look to these approaches before using race-
conscious measures, such as contract goals. Emphasizing the need for 
recipients to take good faith efforts to meet contracting goals 
seriously. Recipients must award a contract to a bidder who documents 
adequate good faith efforts, even if the bidder does not fully meet a 
contract goal. Providing waivers that will afford recipients increased 
flexibility in implementing the program.
  So while the District Court found it difficult to envisage an 
affirmative action program that could be narrowly tailored, it did not 
even have before it the proposed rule that purports to meet that test. 
These regulations are to be finalized within the next month. After 
thorough review, both the Department of Transportation, and the 
Department of Justice have determined the DBE program is 
constitutional.
  The proponents have urged us to comply with the ``unequivocal 
mandate'' of the courts and end the DBE program. The only ``unequivocal 
mandate'' the courts have stated is that race-based programs must meet 
the strict scrutiny test. Contrary to the Supreme Court's decision that 
an affirmative action program could be both narrowly tailored and meet 
a compelling governmental interest, the District Court found it 
``difficult to envisage'' any narrowly tailored program, and moreover, 
it did not have before it the very rule proposed to address the aspect 
of the Supreme Court's strict scrutiny test.
  President Eisenhower, when he was still general, used to say that he 
``. . . never liked to make decisions too quickly . . .'' I would urge 
my colleagues to heed the advice of President Eisenhower, and not make 
a decision to quickly on this matter prior to a determination being 
made of whether the proposed rule can meet the narrow tailoring aspect 
of the Supreme Court's test.

  The Senator from Kentucky's amendment requires states to take action 
to enable emerging businesses to compete for highway and transit 
contracts and subcontracts. These actions include outreach to emerging 
small businesses in the construction industry, technical services and 
assistance with bonding and lending, and technical services and 
assistance with general business management. The amendment prohibits 
discrimination and preferential treatment based, in whole or in part, 
on race, national origin, or gender.
  Mr. President, the proponents of this amendment have lead members to 
believe that the DBE program is really a ``quota program''. I want to 
stress at the outset that this program is not a ``quota program'' as 
some have suggested. There is a great difference between an 
aspirational goal and a rigid numerical requirement. Quotas utilize 
rigid numerical requirements as a means of implementing a program. The 
DBE program utilizes aspirational goals.
  Under the DBE program, state and local government recipients of 
Department of Transportation funds administer the DBE program. Each 
year, they determine how much DBE participation is reasonable to expect 
based on the availability of DBEs and the types of work involved. The 
recipient's annual goal may be more or less than the national 10% goal 
established by Congress, and it is worth noting that if they do not 
meet that goal there are no penalties. In fact, the Department of 
Transportation has never penalized or sanctioned a state or local 
recipient for not achieving their goals. This provides flexibility to 
meet local conditions. Contract goals are not operated as quotas 
because they only require that the prime contractor make ``good faith 
efforts'' to find DBEs. If a prime contractor cannot find qualified and 
competitive DBEs, the goal can be waived.
  In as much as the DBE program is not a quota program, neither does it 
constitute reverse discrimination as the proponents have suggested. The 
DBE program works to remedy discrimination, not cause it. In fact, non-
minority business people who are disadvantaged have applied and been 
accepted into the DBE program. In fact, any white male, as long as he 
can demonstrate social and economic disadvantage, can be admitted to 
the program.
  Let's remember, the Department of Transportation reports that 85% of 
the contracting receipts under ISTEA programs go to non-DBEs with the 
current DBE program in place. This figure indicates that minority firms 
do not dominate the construction industry. The role in the construction 
industry will only be diminished by the elimination of the DBE program.
  The DBE program works to ensure a level playing field for qualified 
DBEs which have for years confronted discrimination and been blocked 
out of contracting opportunities. That discrimination is evidenced by 
District Court's finding that the program meets the compelling 
governmental interest

[[Page S1426]]

prong of the Supreme Court's strict scruity test.


        The Need for a Disadvantaged Business Enterprise Program

  There is discrimination in the construction industry. Minorities make 
up 20 percent of the U.S. population, but minority-owned businesses are 
only 9 percent of construction firms and they get only five percent of 
the construction business. Women own a third of all small businesses 
but received less than three percent of federal procurement contract 
dollars in 1994.
  Lenders discriminate against minority firms. It is a lot harder to 
capitalize a minority construction company. Black construction firms 
can raise fifty times fewer dollars per dollars of equity capital than 
White firms. When there is no affirmative action program, DBEs don't 
get any work.
  In Michigan within six months of ending the state DBE program 
minority-owned businesses were completely shut out of state highway 
construction. During the same period, in the same state, under the 
Federal-aid highway DBE program the same DBEs received 554 subcontracts 
worth 12.7 percent of the federal aid dollars. When there is no 
affirmative action program white-owned prime contractors reject 
minority or women-owned firms even when they offer the lowest bid.
  The DBE program follows the Supreme Court's Requirements. The current 
DBE program sets a national participation goal of 10 percent for 
disadvantaged business enterprises.
  The goals are flexible. DOT can, and has permitted, a lower goal 
based on availability of DBE firms and opportunities for 
subcontractors.
  The goals are sometimes waived completely if a prime contractor, 
despite good-faith efforts cannot find a qualified disadvantaged 
business to meet a specific contract. The proposes regulations respond 
to the ``narrow tailoring standards'' set out by the Supreme Court.
  Courts have said: specific goals should correspond to the 
availability of qualified DBEs in a given market. Provide the same 
opportunity to DBEs that they would have received but for the presence 
of discrimination--no more no less.
  Courts have emphasized the importance of ``race neutral'' measures 
such as outreach, training, and technical assistance.
  Race-neutral measures would be used to achieve as much DBE 
participation as possible before any ``race-conscious'' measures are 
used. Only use ``race-conscious measures to extent, and only for as 
long as, they are needed to achieve a level playing field. Goals are 
not quotas. Prohibits set-asides except in most severe cases of 
discrimination.
  Mr. President, for those who are managing the bill, or might be 
waiting to speak this evening, I don't believe I will use all of my 
time. If I am not holding anybody up, I might reserve some of it until 
tomorrow, or whenever we finish it.
  How much time is allocated to the Senator from New Mexico?
  The PRESIDING OFFICER. The Senator from New Mexico has 36 minutes 
remaining.
  Mr. DOMENICI. Mr. President, needless to say, the Senator from New 
Mexico who comes from a State that has about 11 percent American 
Indians as part of our population mix and about 38 percent Hispanics--
needless to say, I have lived my adult life in an atmosphere where I 
have rubbed shoulders with those members of the minority--American 
Indians and Hispanics--in my State as they spoke of opportunity and as 
they spoke of a chance to own a business and of their hope that their 
children would get a good education so they could have a chance like 
all of us had in New Mexico who are not Hispanics or Indians.
  I have seen a great number of successes in terms of business by the 
minority community in New Mexico. Much less by the Indians 
proportionately--American Indians--than by the Hispanics. And that has 
a lot of cultural nuances to it also, and tribal nuances and the like.
  But I have strived most of my life to try to be part of the kind of 
community and the kind of lawmaking that gave the minorities an equal 
chance to own businesses. That is essentially what we are talking about 
here. And we are engaged in a debate--I don't think a debate about 
whether everyone, including minorities, ought to have a chance to own 
businesses in America. I would assume if we put that question to 
everyone, they would all say of course. But the question is, even 
though we all say of course, do they really have an equal opportunity? 
Is it as easy for an intelligent, well-educated Hispanic American, New 
Mexican, or a Native American to get into business? I will say that 
without any of the Government involved, they are getting more and more 
opportunities. And there is no question that more Hispanics are in 
business in the United States on their own without the benefit of the 
Federal Government programs than those who are in business because of 
the Federal programs.
  But I can also assure you that the Hispanic Americans who live in my 
State and in other States are genuinely listening today to this debate. 
And if they aren't tuned in on C-SPAN, they will soon be hearing what 
people tell them we are doing here on the floor of the Senate. I 
guarantee you, Mr. President, and my good friend, exceptionally good 
friend from Kentucky, who happens to be on the opposite side of this 
issue today, on the precise formulation of the issue--I guarantee you 
that whether Hispanics and Native Americans, or other minorities, or 
women who are part of this program and are scurrying around to catch up 
with the men in business ownership--incidentally, as an aside, the 
fastest growing portion of the American business ownership portfolio is 
now women.
  As a matter of fact, as of 2 years ago, women-owned businesses in 
America, believe it or not, and all by themselves, employed more people 
than the Fortune 500 in America. And it was the fastest growing piece 
of those who were entrepreneurs. On the other hand, that doesn't mean 
that they don't need some help sometime to break into the private 
sector.
  So I have come to the floor concerned because I do not want to be 
part of an America that is saying, because we don't want quotas and we 
don't want set-asides, which I will agree we should not have--we are 
not going to have a major program within the highway programs of this 
country, which we are currently thinking is $173 billion worth of 
business, more or less, over the next 6 years, and add to it $41 
billion more or less for mass transit. I do not want to leave the floor 
with that bill and with people being able to say there may not be any 
minority participation in the businesses that put this fantastic 
roadway and mass transit system together. That may be a bit of an 
exaggeration. But essentially what we have done in the past is to try 
to make sure that there was participation. And we have broadened that 
to women as part of a group of Americans that are disadvantaged when it 
comes to owning their own businesses.
  So I have for the last 3 days--not for months--studied this issue. 
And I must say I didn't have hours upon hours to do it; I have a lot of 
other things I have to do around here. But I have come to the 
conclusion that we do not have to wipe out the Disadvantaged Business 
Enterprise Program in this bill in order to accomplish our goal, which 
I think is rather unanimous, that there be no quotas yet there be some 
positive direction so that women and minorities will get a reasonable 
portion of the business under this very, very large multimillion-dollar 
contract authority that is going out to American business, large and 
small, to fulfill.
  The more I read, and the more I said, ``But you can't be right, 
Senator Domenici, because of your wonderful friend from Kentucky whose 
thoroughness and constitutional acumen on the bill called campaign 
finance''--I read the same cases with him, and I agreed with him. In 
fact, I told him that I had come full circle and could clearly 
understand in campaign finance how it was a freedom of speech issue. He 
recalls that. I would not have gotten to that point. I was still fuzzy 
about it until I heard his interpretations of the Supreme Court.
  But I tell you that I do not agree that this minority business 
program that we have in this ISTEA bill before us is a program that 
mandates quotas and mandates set-asides. In fact, I don't believe it is 
even fair to just look at the face of the statute, as has been done 
here on the floor, and read it, and say it is patently a quota system 
because, Mr. President, it is not implemented without regulations. And 
the

[[Page S1427]]

regulations and the way the program is being implemented, from 
everything I can find out, do not establish quotas or set-asides.
  Then I said, ``Well, my friend from Kentucky, whom I have just 
expressed my admiration for, keeps saying the Supreme Court has already 
ruled it unconstitutional.'' And I said, ``If that is really true, he 
should get 100 votes.''
  So I started asking. I have some lawyers on my staff. I don't think 
necessarily I have Laurence Tribe on my staff. I could have sent it up 
to Harvard for them to look at it. Maybe my friend from Kentucky would 
say that wouldn't be a very good place to send it; I don't know. But 
maybe over to Stanford. Well, let's settle for old Michigan, the 
University of Michigan.
  But in any event, the truth of the matter is that I have now received 
very, very different information that I think makes sense about whether 
this Disadvantaged Business Enterprise Program as currently being 
administered has been declared unconstitutional by the Supreme Court. 
As a matter of fact, let me say I am convinced that it has not.
  What I have done--and I hope the Senate will find this interesting--
is I have asked the Attorney General's Office of the United States and 
the Secretary of Transportation to answer some very precise questions. 
I have them answered. They are so interesting and so precise. Maybe 
that is because I asked the questions that I wanted answered. I would 
like to read them. There are only six. When I am finished later this 
evening, I will pass out the letter to whoever wants it. It will be 
then signed by the Attorney General of the United States and by 
Secretary Slater.
  Let me read the letter. The letter is dated March 5, 1998, directed 
to me.
  It says:
       Dear Senator Domenici: This letter responds to questions 
     that you have posed regarding the Disadvantaged Business 
     Enterprise (DBE) Program currently authorized by the 
     Intermodal Surface Transportation and Efficiency Act.
       1. Has the text of section 1111 been ruled on by the 
     Supreme Court, and if not, how does section 1111 differ from 
     the statute that was before the Supreme Court in Adarand v. 
     Pena?
       The Supreme Court in Adarand v. Pena did not find this or 
     any other program to be unconstitutional. Indeed, the Supreme 
     Court did not even consider the constitutionality of section 
     1003(b) of ISTEA, which sets a 10% goal for expenditure of 
     the authorized funds with DBEs. The Adarand case involved a 
     different program: the Department of Transportation's use in 
     its own direct federal contracts of compensation to encourage 
     federal prime contractors to use DBE subcontractors. The 
     compensation was provided through a specific contract 
     provision used only in DOT's own direct contracts for 
     highways on federal lands. Even as to this compensation 
     program, the Supreme Court's opinion merely establishes that 
     federal race-conscious programs, like state and local 
     programs, are subject to strict scrutiny. The Court made 
     clear, however, that such scrutiny is not ``fatal in fact,'' 
     and that the federal government has a compelling interest in 
     remedying the lingering effects of discrimination through 
     properly tailored programs.
       2. How do you conclude that Section 1111 of the ISTEA bill 
     was not before the Supreme Court in Adarand v. Pena and has 
     not been declared unconstitutional?
       The Supreme Court's opinion in Adarand addresses only the 
     DOT's subcontracting compensation program, not the ISTEA DBE 
     program. The Supreme Court's remand in Adarand makes this 
     clear--it states that the courts below were to determine only 
     ``whether any of the ways in which the Government uses 
     subcontractor compensation clauses can survive strict 
     scrutiny.'' 515 U.S. at 238. Only one district court judge--
     the judge who is considering the remand in Adarand--has found 
     the compensation clause program unconstitutional. While that 
     district court judge also ruled the ISTEA program 
     unconstitutionality of ISTEA was not properly before the 
     court. The Justice Department has argued on appeal to the 
     Tenth Circuit that the district court improperly addressed 
     the constitutionality of ISTEA and, in any event, erroneously 
     concluded that ISTEA was unconstitutional.
       3. Section 1111 of the ISTEA bill states, ``not less than 
     10 percent of the amounts made available under this program 
     shall be expended with small business concerns controlled by 
     socially and economically disadvantaged individuals.'' In 
     view of this language, why is the DBE program not a mandatory 
     set aside or rigid quota program?
       The 10 percent figure contained in the statute is not a 
     mandatory set aside or rigid quota. First, the statute 
     explicitly provides that the Secretary of Transportation may 
     waive this goal for any reason--specifically, the language 
     quoted above is preceded by the phrase ``[e]xcept to the 
     extent that the Secretary determines otherwise.'' Second, in 
     no way is the 10 percent figure imposed on any state or 
     locality. Under the program, it is the states that really set 
     goals for contracting. They may set goals higher or lower 
     than 10 percent depending upon the local availability of 
     DBEs, projected contracting needs and past results of their 
     efforts. Moreover, state agencies are permitted to waive 
     goals when achievement on a particular contract or even for a 
     specific year is not possible.
       The DBE program does not set aside a certain percentage of 
     contracts or dollars for a specific set of contractors. Nor 
     does the program require recipients to use set asides. The 
     DBE program is a goals program which encourages participation 
     without imposing rigid requirements of any type. Neither the 
     Department's current or proposed regulations permit the use 
     of quotas. The DBE program does not use any rigid numerical 
     requirements that would mandate a fixed number of dollars or 
     contracts for DBEs.
       4. The comments to the new rule states, ``[i]f race-neutral 
     means are the first resort under this proposed section, then 
     set asides and other more intrusive means, such as a 
     conclusive presumption, are the last resort.'' In view of 
     this language, why is this not a mandatory set aside or rigid 
     quota program?
       The comment is intended to make clear that race- and 
     gender-neutral mechanisms (e.g., outreach, technical 
     assistance) are the means of first resort for recipients to 
     use in seeking to meet overall goals. In fact, the rule 
     itself prohibits setting aside particular contracts unless 
     the state has been unable to meet its goals for a number of 
     years and there is a court-order or state law which directs 
     the recipient to use set asides. Such set asides would not be 
     permitted, even where state law authorizes their use, unless 
     it can be shown that less restrictive measures, including 
     race neutral programs and flexible contract goals, were 
     insufficient to address the demonstrated effects of 
     discrimination. As discussed above, the DBE program thus 
     neither mandates set asides nor permits the use of rigid 
     quotas.
       5. Are there sanctions, penalties or fines that may be 
     imposed on any recipient who does not meet DBE program goals? 
     In the fifteen years that this program has been in operation, 
     has any state been sanctioned for not meeting its program 
     goals? In answering please provide specific examples to 
     support your conclusion.
       No state has ever been sanctioned by DOT for not meeting 
     its goals. Nothing in the statute or the regulations imposes 
     sanctions on any state recipient that has attempted in good 
     faith, but failed, to meet its self-imposed goals. In 1995, 
     two states failed to meet their goals; in 1996, two other 
     states failed to meet their goals; and, in 1997, three states 
     failed to meet their goals. There were no sanctions, 
     penalties or fines of any kind imposed against any of those 
     states.
       6. Is this program only for minorities and women?
       No. Any individual owning a business may demonstrate that 
     he is socially and economically disadvantaged, even if that 
     individual is not a woman or minority. Both the current and 
     proposed regulations provide detailed guidance to recipients 
     to assist them in making individualized determinations of 
     disadvantaged status. And, in fact, businesses owned by white 
     males have qualified for DBE status.
       7. What recourse is available to low bidders who have made 
     good faith efforts to meet DBE contract goals, but despite 
     those efforts were not able to do so? Is it true that low 
     bidders who have tried but failed to meet the contract's DBE 
     goal are automatically eliminated from consideration for the 
     contract?
       Under the current regulations, if a prime contractor is 
     unable to find available and qualified DBEs to meet a 
     specific contract goal, the goal may be waived. Under the 
     proposed rule, the goal must be waived. No low bidder who 
     tried in good faith but failed to meet the goal is 
     automatically eliminated from receiving the contract.
       Thank you for your interest in, and support of, this 
     important program.
           Sincerely,
     Janet Reno.
     Rodney E. Slater.

  That is the extent of the letter which I have now read into the 
Record. Mr. President, let me say that, obviously, reasonably oriented 
Senators, who have good motives, maybe even the same motives and same 
goals, can disagree. But I take very seriously whether I should come 
down and vote for a statute that is patently unconstitutional, and I am 
very confident that, when I vote against the amendment of the 
distinguished Senator from Kentucky to strike that provision and 
substitute for it, that I am, when I vote against it, voting to leave 
in this bill and the regulations accompanying it, a constitutional 
provision with reference to helping the disadvantaged, including women 
and any business that might qualify that is economically disadvantaged.
  I hope, and I say to the administration very clearly right now: You 
have now put the signature of the Attorney General of the United States 
and the Secretary of the Treasury on the answer to these seven 
questions. And this Senator, and I think a number of other Senators, is 
going to be voting to keep

[[Page S1428]]

the provision in the bill based upon these kinds of assurances. Let me 
make sure that the President of the United States understands that if 
it turns out that, as they produce the completed regulations for the 
program, as they attempt it across the board for all programs--they are 
in the process of doing that; there are many other departments other 
than the Department of Transportation that need refined regulations. 
If, in fact it comes out in a few months that the regulations are not 
being interpreted in the way suggested here, then I assure you that we 
will change them. I am not suggesting we will do away with help and 
assistance in the area that is encompassed here, but many are voting 
because they have confidence that the rules, as they implement this, 
will not be inconsistent with these statements. This better become a 
very, very serious challenge to the administration as they finally 
implement this program.
  If they do that, and they are done as suggested in these responses, 
then I have no doubt that anybody attempting to appeal will lose. I 
have no doubt that the issue will not be before us again, because it 
will not have any set-asides to it, it will not have any fixed ratios, 
the kinds of things that we all know we don't want--quotas, numerical 
quotas and the like.
  With that, I reserve the remainder of my time. But I would say to the 
leadership, if the rest of the time is running out and we are ready to 
vote at any time in the near future, I believe a call to me will get me 
to relinquish the remainder of my time. But for now I will reserve it.
  I yield the floor.
  The PRESIDING OFFICER (Mr. Allard). The Senator form Kentucky.
  Mr. McCONNELL. I can say to my good friend from New Mexico, for whom 
I have the greatest respect, I would like to just mention what the 
Supreme Court said in the Adarand case. Basically what the Supreme 
Court did was to lay out the standard, and they said that any racial 
presumption must be narrowly tailored to meet a compelling governmental 
interest. ISTEA uses that racial presumption. Then what the Court did 
was they sent the case back to the district court to determine what 
statutes and regulations were in play in Adarand and whether the 
statutes and regulations met the strict-scrutiny standard.
  In the district court case--I apologize to my good friend from New 
Mexico if I said the Adarand case declared the regs unconstitutional. I 
don't think I said that on the floor here today. I may have said that 
in some conversation we had yesterday. But what the Adarand case did 
was lay out the standard, sent the case back to the district court, and 
the district court said, and this is a direct quote, ``Section 1003(b) 
of ISTEA and the regulations promulgated thereunder are 
unconstitutional.'' So the district court, applying the standard of 
Adarand, said the case was unconstitutional.
  The Department of Transportation, in trying to appeal the district 
court decision--they don't like that decision. They are going to appeal 
it to the 10th circuit. The Department of Transportation in their 
brief, in describing the lower court decision, says, ``This order 
declares unconstitutional the program operated by DOT, but also the 
Federal aid DBE program operated by the State of Colorado under 
ISTEA.''
  So, I think we are in the same place here. Technically, the Supreme 
Court only laid down the standard in this case. But that was a landmark 
standard. It was sent back down to the district court, which applied 
the standard and found this unconstitutional. And the Court in another 
case, a very similar case to this--the Court meaning the Supreme 
Court--has addressed this issue. So it is not like the Supreme Court 
has never spoken, I would say to my friend from New Mexico, on this 
subject. In the Croson case the Court said, ``In sum, none of the 
evidence presented by the city''--this was referring to the city of 
Richmond, a similar factual situation:

       None of the evidence presented by the city point to any 
     identified discrimination in the Richmond construction 
     industry. We therefore hold that the city has failed to 
     demonstrate a compelling interest in apportioning public 
     contracting opportunities on the basis of race.
       To accept Richmond's claim that past societal 
     discrimination alone can serve as the basis for rigid racial 
     preferences would be to open the door to competing claims for 
     remedial relief for nearly every disadvantaged group. The 
     dream of a nation of equal citizens in a society where race 
     is irrelevant to personal opportunity and achievement would 
     be lost in a mosaic of shifting preferences based on 
     inherently unmeasurable claims of past wrongs. Courts would 
     be asked to evaluate the extent of the prejudice and 
     consequent harm suffered by various minority groups. Those 
     whose societal injury is thought to exceed some arbitrary 
     level of tolerability then would be entitled to preferential 
     classifications. We think such a result would be contrary to 
     both the letter and spirit of a constitutional provision 
     whose central command is equality.

  Finally, let me say the Supreme Court has addressed a similar issue 
in the Croson case. The Supreme Court laid down the standard in 
Adarand, sent it to the district court, which applied the standard 
which found the very provision we are talking about unconstitutional. 
That is on appeal to the 10th circuit. And the sufficiency of the new 
regs that my good friend from New Mexico and other speakers on the 
other side of this issue have referred to I suppose is the issue before 
us today. In other words, has the Department of Transportation, bearing 
in mind the Adarand decision and the subsequent district court 
decision, adjusted the regulations in such a way as to come into 
compliance with the law?
  I cite on that point a letter from George LaNoue, who is an expert in 
this particular field who has testified before a number of 
congressional committees on this subject. Professor LaNoue addresses 
the adequacy of the new regs. He says:

       It is being asserted that various alterations and proposed 
     regulations for ISTEA solve the constitutional problems 
     created by the use of race, ethnic and gender preferences in 
     awarding of contracts under that program. That assertion is 
     incorrect for two reasons. First, the regulatory alternatives 
     go only to the issue of narrow tailoring--

  Narrow tailoring--

     not to the constitutional requirement that a compelling basis 
     of remedying identified discrimination be established before 
     any, for the use of preferences, be considered. None of the 
     fundamental evidentiary requirements necessary to support the 
     preferences in this legislation have been established by the 
     administration or by Congress.

  He concludes his letter, which I will ask to have printed in the 
Record:
       Proposed regulations are either irrelevant or incomplete to 
     the major requirements of narrowly tailoring, and they do not 
     begin to supply a compelling basis for the use of 
     preferences.

  So where I think we are is that reasonable people can differ about 
what the courts are saying. I think it is pretty clear that the Senator 
from New Mexico probably speaks for the majority here in the Senate, 
and we will get an opportunity, as he indicated, to find out what the 
law is because it is on appeal to the 10th circuit.
  It is also very, very clear that quotas and preferences are going to 
die hard, Mr. President, in this country. There are roughly 160 
preferential quota and preference programs in the Federal Government 
which dole out benefits on the basis of gender and race. It looks as if 
the only way we will be able to dismantle those is case by case by 
case.
  The Senator from New Mexico is certainly correct, the district court 
decision applying the standard in Adarand is on appeal to the 10th 
circuit. But there are numerous Supreme Court and circuit court 
decisions that give us an indication of what the result will be. It 
will probably be a denial of cert, which someone will argue, again, is 
not a Supreme Court decision. But a denial of cert, if the 10th circuit 
upholds the district court, will, in fact, finish the case.
  I am not saying the Senator from New Mexico will take this position 
at all, but I bet you there will be some, I say to my good friend from 
New Mexico, who, if we offer this amendment at some later time, will 
say, ``Well, there wasn't a Supreme Court decision on it, it was only a 
denial of certiorari.
  So I thank the Senator from New Mexico. I understand the sensitivity 
of this issue. I certainly agree with him that he could rely on the 
Attorney General's opinion about this, if he chose to. She is a part of 
the administration. The administration opposes dismantling this 
particular program. Just speaking for myself, I am not surprised that 
she would take the position she does, and ultimately the courts will 
decide.
  Mr. DOMENICI addressed the Chair.
  The PRESIDING OFFICER. The Senator from New Mexico.
  Mr. DOMENICI. I yield myself up to 5 minutes.

[[Page S1429]]

  Let me say to my friend from Kentucky, actually, I am very pleased 
with the remarks he has made, because essentially there is no question 
that the amendment which he offers, as I view it, is premature if the 
purpose is to make this bill eliminate any program that has been ruled 
by the Supreme Court to be unconstitutional, because obviously, 
whatever the district court did with it--and it has not been rendered 
unconstitutional prior to this district court decree--whatever they did 
to it is on appeal. As a consequence, we don't even know if the 
appellate court agrees that it is unconstitutional as determined by the 
district judge who, incidentally, did not even have ISTEA before the 
court when this decision was rendered.

  Let's just make one other observation about the administration. And I 
hope Democrats will join me with this. I have just said they better be 
right. They just told us what it does and doesn't do and how they are 
going to make sure it is tailored that way. But I think it is fair to 
say to the President that some of us remember when the decisions came 
down from the Supreme Court about set-asides and the 8(a) program and 
others that, as the President said--and I can't quote him verbatim nor 
do I remember the time, but I can assure you it was sometime back--``I 
will have my administration go through all these laws and correct them 
so that they meet what the Supreme Court's test is.'' Frankly, there 
are a lot of people who have been waiting for them to get that done.
  Mr. McCONNELL. I ask my friend, did they find any they thought were 
inappropriate?
  Mr. DOMENICI. As a matter of fact, I understand from conversations 
this morning, the conversations that preceded this letter, that they 
are in the process of rewriting rules and regulations for all of them, 
not just ISTEA, and I said, ``You better hurry up.''
  We all know that they have to be rewritten. The minority community 
knows they have to be rewritten. This debate may have been avoidable. 
Had they written these both generic and specific rules, we might not 
have had this argument.
  The answer I received, so the Senator will know, is that it is very 
difficult when you look at the whole array of programs. The Senator 
says there may be more than 160?
  Mr. McCONNELL. Close to. Between 150 and 160.
  Mr. DOMENICI. It is very difficult for the lawyers and those who put 
them together to get it all finished. I think this debate and this 
letter will push them to get it done, and get it done as quickly as 
possible.
  I yield the floor, and I thank the Senator.
  Mr. McCONNELL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. Mr. President, with regard to the likelihood of the 
district court decision in Adarand being overturned--I see my friend 
from New Mexico is leaving--just to close the discussion on what is 
likely to be the outcome in the case, I asked the Congressional 
Research Service about the cases in this particular area of the law.
  Let me, Mr. President, for our colleagues in the Senate, point out 
that the Congressional Research Service has found no--no, not a one--no 
court ruling after a trial where a race-based contracting program has 
met the Supreme Court's test of strict scrutiny.
  I say to my friend from New Mexico, there hasn't been a single case 
that the Congressional Research Service could find where a race-based 
contracting program has met the Supreme Court's test of strict 
scrutiny. In fact, CRS has explained that Adarand conforms--this is not 
sort of an aberration out there --it conforms to a pattern of Federal 
rulings across the country striking down race-based contracting 
programs as unconstitutional:
  Associated General Contractors of California v. San Francisco, a 
ninth circuit case; Michigan Road Builders v. Milliken, a sixth circuit 
case; Groves v. Fulton County in the Northern District of Georgia; 
Milwaukee County Pavers Association v. Fiedler in the seventh circuit; 
Associated General Contractors of Connecticut v. New Haven, district 
court in Connecticut; O'Donnell Construction Co. v. District of 
Columbia in DC Circuit; Arrow Office Supply v. Detroit, Eastern 
District of Michigan; Louisiana Associated General Contractors v. 
Louisiana in Louisiana; Associated General Contractors of America v. 
Columbus, Southern District of Ohio; Engineering Contractors 
Association of South Florida v. Metropolitan Dade County in the 11th 
circuit; and finally, Contractors Association of Eastern Pennsylvania 
v. Philadelphia in the third circuit; and more recently, Monterey 
Mechanical v. Wilson in the ninth circuit, decided last September; 
Houston Contractors Association v. Metropolitan Transit, decided last 
November.
  Mr. President, CRS was unable to find a single court ruling where 
after a trial a race-based contracting program has met the Supreme 
Court's test of strict scrutiny.
  I think it is extremely unlikely, in conclusion, I say to my friend 
from New Mexico, that we are going to have a court decision overturning 
the district court finding after Adarand laid down the standard. I 
thank him for his important contribution.
  This is a very, very important issue about what kind of a country we 
are going to have, what kind of America we are going to have. Are we 
going to realize Martin Luther King's dream of a colorblind society, or 
are we going to continue down what the Senator from Kentucky believes 
is a mistaken path of putting people into boxes, into groups, and to 
doling out benefits and rights based upon what ethnicity they may be, 
whether they are male or female? Are we going to continue to go down 
that path or really work to achieve a colorblind society? I think the 
courts are telling us that quotas and preferences based on race, 
ethnicity, and sex are not going to be upheld. The pattern is clear, 
and it seems to me we ought to follow what is, it seems to me, the law 
of the land in this particular instance. I yield the floor.
  Several Senator addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana.
  Mr. BAUCUS. Mr. President, I note Senator Kennedy is on the floor. He 
has been over here many times seeking to speak. I yield to the Senator 
15 minutes.
  Mr. KENNEDY addressed the Chair.
  The PRESIDING OFFICER. The Senator from Massachusetts.
  Mr. KENNEDY. Mr. President, I welcome this opportunity to continue 
the debate on the steps needed to achieve the goal of equal opportunity 
for women and minorities. Clearly, we have made substantial progress 
toward the goal of equal justice under law, but just as clearly, we 
still have a long way to go.
  From President Kennedy to President Nixon to President Clinton, there 
has always been bipartisan recognition in the White House and Congress 
that the playing field is not level for women and minorities and 
widespread acceptance of the need to take steps to remedy the effects 
of persistent discrimination.
  Civil rights is still the unfinished business of America. We have 
made significant progress toward justice for all and opportunity for 
all. But, as the church arson epidemic, the Texaco and Mitsubishi 
scandals, the Good Ol' Boys Round Up, and the brutalizing of a Haitian 
immigrant by police officers in New York City demonstrate, we are not 
there yet.
  Incredibly, there are some who believe that discrimination is a thing 
of the past, and that the playing field is now level for women, for 
minorities, and for other victims of discrimination. They are wrong. 
Job discrimination is still a persistent problem for minorities in all 
aspects of the economy. The glass ceiling still prevents large numbers 
of women from attaining important job opportunities.
  Nowhere is the deck stacked more heavily against women and minorities 
than in the construction industry. African American contractors still 
report arriving at job sites to find signs with racial epithets. One 
African American contractor was told to leave a home site by a white 
customer who said, ``You didn't tell me you were black and you don't 
sound black.'' In California, a female contractor was told that the 
reason her asbestos-removal business had declined, even though her work 
was good, was because ``it's back to the good ol' boys club. Haven't 
you heard affirmative action is out?''
  There is no doubt that if we terminate meaningful programs, like the

[[Page S1430]]

Disadvantaged Business Program in ISTEA, the clock will be turned 
back--back to bigotry, back to closed-door deals, back to denial of 
opportunity. The door that America is steadily opening to women and 
minorities will be shut once again.
  Proof comes from communities across the Nation. If we terminate a 
State disadvantaged business program, public contracts awarded to 
businesses owned by women and minorities decline rapidly.
  In Philadelphia, contracts awarded to women and minorities dropped 97 
percent--97 percent--in the first month after the city terminated its 
disadvantaged business ordinance.
  In Tampa, contracts awarded to black-owned firms dropped 99 percent--
when that city ended its goals program.
  In Michigan, minority firms were eliminated as contractors on State 
highway projects within 6 months after the suspension of the State's 
disadvantaged business program in 1989. Within 9 months, participation 
by women-owned businesses had dropped to 1 percent of total awards.
  Can it be that no qualified minority contractor was available for a 
highway construction contract in Michigan after the State program 
ended? It defies reason to believe that is true.
  The Disadvantaged Business Enterprise Program and others like it have 
brought new faces to the table. Many women and minorities have had the 
opportunity to participate--to show they can excel. An electronics 
company in Orlando--a steel assembly firm in Illinois--a crane and 
crane operator supplier in Chicago--all owned by women. This program 
gave them the opportunity to prove themselves. But if these programs 
end, they are deeply concerned that the major contractors that called 
them and the companies that praised their work will disappear--not 
because they do bad work, or charge more than their competitors, but 
because they are women.
  Dorinda Pounds, currently president of Midwest Contractors, Inc., an 
Iowa highway construction business, had trouble getting startup 
capital. After 9 years in the construction business, she had decided to 
start her own business and was faced with the task of raising $500,000 
for equipment and expenses. She turned to banks and investors, but they 
initially expressed concern that the male contractors would lock her 
out and the banks would not recoup their investment. The DBE program 
certification was indispensable in persuading bankers and investors to 
take a chance on her new company.
  Three years later, prime contractors ask for her--not because she is 
a DBE, but because she can get the job done.
  Jennylynne Gragg, president of G and G Signals and Lighting, is 
another example. After 6 years in her parents' construction business, 
she became the company's general manager, and was able to increase 
profitability immediately. Her father, acting on his belief that the 
construction industry is ``no place for a woman,'' offered her job to a 
younger brother with no experience, and Jennylynne decided to prove him 
wrong.
  Eight years later, she operates a successful contracting business of 
her own. But it has not been easy. She and her mother--now a business 
partner --have to struggle to obtain financing. General contractors 
often solicit their bids with no intention of hiring them. Even when 
they are the low bidder, general contractors have often used another 
firm and accepted a higher bid.
  Why would a general contractor accept a higher bid? It doesn't make 
sense--unless you remember that the traditional business network 
doesn't include women or minorities. At a Judiciary Committee hearing 
on this issue, Janet Shutt, who operates an Indiana construction 
company, said some general contractors would rather lose money than 
deal with female contractors.
  The Department of Transportation DBE program is changing all that. 
The program was signed into law by President Reagan in 1983 to assist 
minority-owned firms.
  It was expanded in 1987 to include women. President Reagan and 
Congress recognized that it was time to end the pervasive 
discrimination in the highway construction industry, that positive 
steps were needed to eliminate years of bias against women and 
minorities.
  Under the DBE program, the Department of Transportation sets a 
national goal--10 percent of Federal contracting dollars--for 
participation by women and minorities. States then set their goals--not 
quotas or set-asides--based on the availability of DBEs and the kind of 
work that must be completed. Most States set a goal of 10 percent. But 
on occasion, States have set goals lower or higher than the national 
level. States have never been penalized for failing to meet their goal.
  Once States set their goals, contracts are identified for DBE 
participation. Prime contractors must either meet the goal or show that 
they have made a good-faith effort to meet it. The new regulations 
proposed by the Department of Transportation clarify that States must 
accept valid showings of good-faith efforts, so that the goal will 
never become a quota.
  The proposed regulations also ensure that only truly disadvantaged 
businesses can participate in the DBE program. Currently, although 
women and minorities are presumed to be DBEs, those who are not 
economically disadvantaged are excluded from the program. The new 
regulations will ensure the integrity of the program by requiring that 
women and minorities certify that they are disadvantaged and provide a 
summary of net worth. The presumption may be challenged at any time by 
the State or the local certifying agency, the Federal Government, or 
any third party.
  Contracting firms owned by white males may also participate in the 
DBE program, and the proposed regulations clarify the existing 
requirements for certification. In fact, Randy Pech--the owner of the 
Adarand Construction Company involved in the Supreme Court case--is 
seeking DBE certification.
  Discrimination by general contractors is a major obstacle faced by 
women and minorities. But there are many others. A white contractor 
with a background identical to that of an African American contractor 
can expect to receive over 50 times as many loan dollars per dollar of 
equity capital. A study of contractors in Atlanta found that 19 percent 
of nonminority firms had unlimited bonding capacity--a privilege 
granted to no minority firm, regardless of size.
  Similarly, an African American owned company in Georgia found that if 
it sent white employees posing as owners of a white-owned company to 
purchase supplies, they could receive price quotations two-thirds lower 
than those quoted to the parent company.
  Discrimination in the form of higher quotations from suppliers is 
commonplace. A recent survey reported that 56 percent of African 
American business owners, 30 percent of Latino business owners, and 11 
percent of Asian owners had experienced this discrimination.
  Yet, despite the exclusion, the mistreatment, and the prejudice that 
women and minority businesspeople experience every day--despite the 
clear and convincing evidence that the DBE program and others like it 
have given women and minorities a first, fair chance to succeed, there 
are those who want to eliminate this sensible program.
  Some argue that the DBE program is unconstitutional. But, the Supreme 
Court's Adarand decision did not strike down the program, nor does it 
prevent Congress from supporting measures to respond to the pervasive 
discrimination that still exists in this country.
  The Supreme Court, in reviewing this issue, has said only that 
Federal race-conscious programs must undergo ``strict scrutiny''--they 
must be narrowly tailored to meet a compelling governmental interest.
  The Court did not say that affirmative action programs are 
unconstitutional. What the Court did say is that:

       [W]e wish to dispel the notion that strict scrutiny is 
     ``strict in theory, but fatal in fact.'' The unhappy 
     persistence of both the practice and the lingering effects of 
     racial discrimination against minority groups in this country 
     is an unfortunate reality, and government is not disqualified 
     from acting in response to it.

  To ensure that the DBE program passes the strict scrutiny test, the 
Department of Transportation is currently completing new regulations 
that give priority to race-neutral measures. The regulations also 
emphasize that States must award contracts to bidders who document 
adequate good-faith efforts, even if the bidder doesn't meet

[[Page S1431]]

the DBE goal. In addition, the regulations clarify DBE certification 
standards, including the eligibility of white males who prove 
disadvantage.
  We know that properly administered programs can meet the strict 
scrutiny test. State and local programs implemented after the Supreme 
Court's Croson decision prove this point completely.
  I urge my colleagues to vote against the amendment offered by Senator 
McConnell. I support education and outreach efforts to eliminate 
discrimination. But they are not enough alone to end the discrimination 
that clearly exists. Congress must remain committed to taking needed 
steps to guarantee equal opportunity for all Americans.
  Mr. President, I yield back the remaining time.
  The PRESIDING OFFICER. Who yields time?
  Mr. McCONNELL addressed the Chair.
  The PRESIDING OFFICER. The Senator from Kentucky.
  Mr. McCONNELL. The Senator from Indiana is around. Someone can check 
the cloakroom. He is, as far as I know, the last speaker on this side 
for the evening. He is on his way, I am told.
  The PRESIDING OFFICER. Does the Senator suggest the absence of a 
quorum?
  Mr. McCONNELL. I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCONNELL. Mr. President, I yield to the distinguished Senator 
from Indiana such time as he may need.
  The PRESIDING OFFICER. The Senator from Indiana is recognized.
  Mr. COATS. Mr. President, we are considering an amendment offered by 
the Senator from Kentucky, which is designed to address one part of the 
increasingly contentious debate over affirmative action. The Supreme 
Court's ruling in the Adarand decision most probably makes the existing 
Disadvantaged Business Enterprise Program unconstitutional; and, 
therefore, I think the Senator's amendment is appropriate.
  There is a growing sense, however, that as well-intentioned as 
affirmative action and set-aside programs are, whether they are 
constitutional or not, really in any way can be reconciled to the 
American commitment to equal justice under law. At the same time, I 
think it is important to point out that Americans do remain deeply 
troubled by the persistent poverty and lack of opportunity that quotas 
and affirmative action were originally meant to remedy. As unemployment 
approaches zero in much of the country, the inner cities are still 
overwhelmed by double-digit joblessness, social breakdown, and 
education failure.
  I want to be clear here this evening: Quotas and set-asides are not 
the answer to these problems. We have tried that. It has not worked. It 
does, I believe, violate constitutional principles of equal justice 
under law. Set-asides and quota programs have been largely a non 
sequitur to the social and economic questions faced by the urban poor.
  Quotas and set-asides do not strengthen civil society and do not 
strengthen our neighborhoods. It is the churches and charities and 
volunteer groups and community associations that bind neighborhoods 
together, along with strong families. That is what makes progress 
possible in these areas, not a statute written by the Congress that 
attempts to force a solution that cannot be forced.
  Quotas and set-asides do not foster the kind of spirit of 
entrepreneurship, that is necessary and needed in these communities, by 
encouraging the creation of the kinds of small businesses that provide 
employment and help anchor community life. And they do nothing at all 
for millions of children who are trapped primarily in urban public 
schools serving primarily low-income families--schools which, by any 
measure, are failing to provide adequate education for children who are 
trapped in this school system.
  When it comes to the real concerns of urban America, the national 
debate over set-asides and quotas is just off the mark, Not just off 
the mark; it is irrelevant. An unfortunate side effect of this debate, 
however, is that it gives the impression that those who support the 
amendment of the Senator from Kentucky have nothing else to say about 
the real concerns of poor Americans living in inner cities, all they 
want to do is eliminate the one advantage that individuals have.

  Now, in the warp and woof of this quota debate, these supporters--
Republicans, conservatives, and the others--are painted as largely 
unknowing and uncaring and uninterested in the real concerns of the 
poor. Now, if this charge was warranted, it would be a tragedy--a 
tragedy for our party, a tragedy for conservatives, a tragedy for 
Republicans. But such a charge is not warranted.
  Those who would support the amendment from the Senator from Kentucky, 
those who would acknowledge that the quota set-aside program has not 
addressed the real problems, are not those without alternative 
proposals. They are not those who don't share the concerns of the poor. 
We, as a group, have put considerable time and energy and thought into 
new approaches to helping restore our cities, renewing the hopes and 
dreams of those who live on some of America's meanest streets and 
meanest neighborhoods, addressing their concerns for the need for 
community empowerment, for strengthening families.
  Several years ago, I introduced a package of proposals under the 
title of ``Projects for American Renewal.'' It attempted, through a 
series of initiatives of Federal seeding and Federal support, 
demonstration programs, and grants, to accomplish a number of things, 
but primarily falling in three areas: Strengthen families, because 
families are so key to the strength and stability of communities, but 
recognizing that not all families are intact; and promoting the role of 
mentors, organizations and individuals that can provide support for 
children who don't have fathers at home to help them. It addressed the 
need for strengthening those community institutions--institutions of 
charities and nonprofits, churches, synagogues, and other institutions 
within the community that can reach out and address some of these most 
fundamental social programs in ways that government programs never have 
and never will.
  It sought to provide for community renewal through a series of 
empowerment measures and economic empowerment measures designed to 
gather capital, build businesses, and provide job opportunity and job 
growth for businesses within communities that needed the help the most.
  For the past 18 months, a group of us have been meeting under the 
title of ``Renewal Alliance,'' a group of roughly 30 Republican Members 
of the House and Senate seeking to craft a new program of outreach and 
empowerment to our Nation's urban areas and to our Nation's poor. We 
have rejected the failed model of the past, the top-down Federal 
programs that have brought devastation in inner-city communities. We 
have also, however, rejected a ``hands off'' approach that believes the 
best Federal urban policy is no policy at all.
  Instead, we have attempted, through the Renewal Alliance, to provide 
an opportunity agenda for urban America. We acknowledge that there is 
at least a startup role that the Federal Government can play, primarily 
through the Tax Code changes and through some seed money, but we also 
want to make sure that the role of the Government is that of a 
supporter and an encourager and a partner to local leaders and 
institutions who know firsthand what America's urban problems are and 
are already well on their way to finding solutions.
  It is clear to us that from the range and complexity of problems 
plaguing our inner cities, that capital development--social, human, and 
economic capital--is the key to the long-term renewal of urban 
communities.
  Our plan addresses this problem at three levels. First, through a 
charity tax credit and an expanded charitable choice program, we shift 
authority and resources away from government and toward those private 
charitable, religious, and voluntary organizations

[[Page S1432]]

that undergird the life of local communities. We support private 
economic development through targeted tax incentives and regulatory 
relief. And we address the dramatic educational defects of urban 
schools by providing publicly funded scholarships for poor children to 
attend schools of their choice.
  I will take a few minutes--with the indulgence of the proponent of 
this amendment, my good friend, the Senator from Kentucky--to in more 
detail describe the Renewal Alliance agenda and its vision for urban 
America.
  First let me talk about community empowerment. Community activist Bob 
Woodson said there is no social program in America today that is not 
being solved somewhere by someone. The most intractable problems we 
face--drug addiction, teen pregnancy, homelessness, youth violence--are 
being conquered by community leaders most of us have never heard of. 
Pastor Freddie Garcia of San Antonio has a drug treatment program that 
has an 80 percent success rate, compared to the single-digit 
performance of government programs. An independent study of Big 
Brothers-Big Sisters found among at-risk youth, adult mentoring cut 
first-time drug use by 46 percent, school absenteeism by 52 percent, 
and violent behavior by a third.
  These are just two of hundreds of examples of programs and 
individuals involved in leading those programs that are making a 
difference in dealing with these difficult social problems that plague 
different communities, neighborhoods, and families in America.
  We propose a package of reforms that will strengthen these 
institutions, these charities, these volunteer groups, that bind 
communities together and actually heal individual lives. We want to 
continue the work of the 1996 welfare reform by encouraging States to 
transfer more authority and resources to the private nonprofit groups 
and religious groups through State-based charity tax credits.
  Our bill also expands and strengthens the charitable provisions 
contained in the 1996 welfare bill to permit faith-based institutions 
to compete for all types of Federal human services contracts. The 
Community Empowerment Initiative also builds on last year's Volunteer 
Protection Act by limiting the liability of businesses that provide 
equipment or facilities for use by charitable organizations.
  The second component of our Renewal Alliance program is economic 
empowerment. One of the great underreported stories of America's 
booming economy is the fact that tight labor markets are increasingly 
forcing businesses to look to inner cities for labor. In Wisconsin, 
Allen-Edmonds Shoes last year moved a major facility from Port 
Washington to inner-city Milwaukee to take advantage of the untapped 
labor pool there. The city of Indianapolis has engaged in an aggressive 
program to bring businesses into poor neighborhoods by reducing 
regulations and promoting the relative lack of economic competition in 
inner-city communities.
  Our legislation wants to build on these trends. We target the 100 
poorest communities in our Nation with tax and regulatory relief 
designed to spur economic growth on a long-term basis. Our plan reduces 
to zero the capital gains tax for investments in troubled areas, 
increases the expensive plants and equipment purchases by small 
businesses in the zones, and allows businesses in these zones to 
receive a 20 percent wage credit for hiring qualified low-income 
workers. To qualify for these benefits, States and localities must 
agree to reduce local tax rates and fees within the renewal community 
and to waive local and State occupational licensing regulations. The 
proposal would also create family development accounts that encourage 
low-income families to save a portion of their income or of their EITC 
refunds, to be matched by private contributions which would be 
available for the purchase of a home, education expenses, or creation 
of a small business.

  The third part of our program is educational choice for low-income 
families. The recent survey on urban education by Education Week 
reemphasized the alarming state of our urban schools. Nationwide, just 
43 percent of students attending urban schools meet the most minimal 
standards for reading comprehension. In schools in high poverty areas, 
only 23 percent meet the basic standard. This pattern held true in math 
and science, as well as reading.
  Urban parents whose children are trapped in schools in which failure 
is virtually guaranteed are increasingly demanding real change and real 
alternatives. Publicly and privately financed scholarship programs are 
now operating at over 30 cities. Early studies of these programs show 
substantial academic improvement among participating students and a 
sharp jump in parental satisfaction with the education their children 
are receiving are the results and consequences of these initiatives.
  Our legislation tackles the education problems faced by inner-city 
children from two different angles. First, we call for a large-scale 
test of publicly funded scholarships for poor children. We believe 
these scholarships would provide some immediate relief for families and 
inject badly needed competition in the public school system. The 
scholarships would also put real pressure on the public system for real 
reform as families begin shopping for schools that work. I am pleased 
to offer these initiatives here on the Senate floor with Senator 
Lieberman on a bipartisan basis in the past several years, and we want 
to continue to do that.
  The second part of the renewal education reform plan is targeted at 
relieving the regulatory burden faced by urban schools. Administrators 
routinely complain that although the Federal Government provides only a 
fraction of overall education funding, it imposes an overwhelming 
majority of the paperwork. Our bill would provide an education flex 
waiver for urban school districts that will permit them to devote more 
of their dollars to the classroom and less time filling out forms.
  This is the Renewal Alliance plan in brief: To restore urban America, 
community empowerment, economic renewal, educational choice, and 
reform. We do so not by putting the Federal Government in charge, but 
by bringing it alongside as a supporter of those individuals and those 
civic institutions, nonprofits, churches and charities, synagogues and 
parishes, that are already at work rebuilding lives and rebuilding 
neighborhoods.
  Mr. President, I will vote for the McConnell amendment. I believe the 
constitutional case for it is compelling. The Senator from Kentucky has 
crafted a measure that I believe addresses the issue of encouraging 
participation by the underprivileged of taking advantage of the highway 
funding that will result from passage of this bill. But I don't want 
this vote to be interpreted as the answer to the problems that affect 
the underprivileged, the answer to the problem that affects our 
communities. We need to do much more. We need a much more comprehensive 
effort.
  The Renewal Alliance has proposed such an effort. It is not written 
in stone. It is open to amendment. It is open to suggestion. It doesn't 
answer the whole problem, but it moves us in a substantial direction 
toward solving that problem. I'm going to discuss this in greater 
detail. We will be offering this legislative package. We will be 
exploring opportunities throughout this legislative session to debate 
and vote on all or some of this package of proposals.
  I am joined by a number of my colleagues here in the Senate. I hate 
to start naming names, but key among them are Senator Santorum and 
Senator Abraham. We are working with an expanded group of Senators who 
have real concerns and want to propose real solutions to some of the 
most difficult problems we face as a Nation.
  So with that, Mr. President, we will be saying more and doing more on 
this initiative in the future, but I wanted to take this opportunity to 
at least inform our colleagues that this vote is simply the opening 
foray into an area that I think the Senate needs to seriously address 
and give serious debate and initiatives toward solving. I look forward 
to the opportunity to continue this effort.
  I yield the floor.
  Mr. SESSIONS. Will the Senator yield?
  Mr. COATS. I am happy to yield to the Senator.
  Mr. SESSIONS. First, I congratulate the Senator very much on this 
renewal idea and community empowerment. I had the opportunity to serve 
as a U.S.

[[Page S1433]]

attorney and be a coordinator of a communities-based revitalization 
program known as Read and See in Mobile and Martin Luther King Jr. 
neighborhoods--a great neighborhood that declined dramatically over the 
years.
  What we did first was we had a big town meeting, a community meeting 
of the leaders and the people who live there. We broke up into 
discussion groups and we listed priorities. All 10 groups listed 
priorities that they thought their community needed most. First, I 
remember distinctly that every group listed crime. They wanted a safer 
neighborhood for their children and their families to live in. They 
listed programs where they wanted their churches to be stronger in 
helping kids. As I recall, I can't think of a single one that listed a 
preferential contract for businesspeople as a need for that community.
  Is that what the Senator was saying and suggesting, that we really 
need to deal with deeper problems than the kind we may be so 
politically engaged in now?
  Mr. COATS. That is precisely what I was saying. I appreciate the 
Senator's experience and involvement with programs that are locally 
based and really make a difference in people's lives. What I was trying 
to say here is that we are faced with a situation where we have a 
statute on the books that appears to be unconstitutional. I think it 
goes against the grain of equal treatment under the law--something that 
is the foundation for what this country believes in. But I didn't want 
to misinterpret it as the attempt, this year, by the U.S. Senate or 
U.S. Congress in addressing problems that affect people that are called 
``underprivileged'' or ``low-income'' or ``minorities'' or people who 
live in targeted urban areas. There are deeper problems. There are 
problems that have defied the Federal solution and have defied the 
legislative solution but have lent themselves to local solutions, often 
faith-based solutions, or nonprofit, charitable solutions that we can't 
write statutes for. Can we assist in the transition of moving the 
Government from a ``one-size-fits-all, let Washington solve the 
problem,'' to an aspect of greater involvement of these organizations 
in dealing with these problems? I think we can. What we are trying to 
do here is outline some steps that we believe we should take in order 
to accomplish that.
  I appreciate the continued support of the Senator from Alabama and 
his interest in this and his experience in this. I welcome his 
participation, as he has offered in the past and I know he will in the 
future, in terms of our Renewal Alliance efforts.
  Mr. SESSIONS. Mr. President, I agree with that. Every group that 
listed ideas for that neighborhood--all of their ideas were good and 
all of those ideas would work. I think you are correct, Senator Coats, 
in how you are approaching this idea. I believe that we need to allow 
the people in our communities to develop plans for their own 
neighborhoods, to make them work, and we will get a lot better ideas 
than some of the programs that have been conjured up in this Congress.
  Mr. COATS. Mr. President, I thank the Senator and yield the floor.


                  Unanimous Consent Agreement--S. 1173

  Mr. CHAFEE. The majority leader has informed me that there will be no 
more rollcall votes tonight. Second, I ask unanimous consent at 9:30 
a.m. on Friday, March 6, the Senate resume the pending McConnell 
amendment regarding contract preferences and there be 90 minutes 
remaining for debate, equally divided between opponents and proponents, 
with 45 minutes of that time equally divided between Senators Baucus 
and Chafee, and at 11 a.m. on Friday, the Senate proceed to a vote on 
or in relation to the amendment, and no other amendments be in order 
prior to that vote. I further ask consent that if the amendment is not 
tabled, it be open to further amendment and debate.

  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. CHAFEE. In light of the agreement, as I previously announced, 
there will be no further rollcall votes this evening. The next rollcall 
vote will occur tomorrow morning at 11 a.m.
  Mr. BAUCUS. Mr. President, I see the distinguished Senator from 
California on the floor. She would like to address the McConnell 
amendment.
  I yield 5 minutes to the distinguished Senator from California.
  The PRESIDING OFFICER. The Senator from California is recognized.
  Mrs. BOXER. Mr. President, it is indeed an honor to participate in 
this debate, a very important debate.
  Mr. President, I will be voting against the McConnell amendment, 
which would eliminate the Department of Transportation's highly 
successful Disadvantaged Business Enterprise Program. The main reason I 
am doing it--and there are many reasons--is because this program is of 
great benefit to small businesses in my State.
  Now, opponents of this program have attempted to label it a quota 
system. I oppose quotas because quotas are bad policy and quotas are 
unconstitutional. The people of California feel very strongly against 
quotas. But what is important to note, as so many of my colleagues have 
pointed out, the DBE Program is far from a quota program. It is, in 
fact, a flexible outreach program with goals that bring into the 
highway contracting industry many small businesses which might 
otherwise be overlooked or left out.
  Now, this program is so flexible, Mr. President, that no State has 
ever been fined, no State has ever been reprimanded for not meeting the 
goal, because there is no quota; there is a goal.
  Now, we know that small business growth has been the most incredible 
dynamic in California's economic recovery. There is no way--no way--
that a Senator from California, in my opinion, should vote against 
anything that would put a damper on this extraordinary growth.
  What is interesting to me--because I have listened to the debate and 
I have heard Senator McConnell use the term ``race-based'' several 
times--is that white males have always been eligible for the DBE 
Program. They can participate, as well as, of course, minorities and 
women. Now, under the new regulations, everyone who participates will 
have to be certified that they are in fact disadvantaged. In other 
words, wealthy individuals, whether they are white, whether they are 
black, whether they are brown, whether they are women--none of them can 
participate in this program if, in fact, they are not disadvantaged.
  So, Mr. President, it is very clear to me--and it is as clear as it 
can be--that this program is about assuring every American, regardless 
of their background, wherever they are from, that they will have a fair 
chance as small businessowners to participate in this very important 
highway program. I want to say, as a member of the Environment and 
Public Works Committee, it really makes me proud to see the leadership 
from my chairman, Senator Chafee, and the ranking member, Senator 
Baucus. I think that the two of them have really shown the way.
  I want to also point out that Senator Warner, by adding his strong 
voice to this debate, is also making a point that in this great Nation 
the last thing we want to do is put a damper on the growth of small 
business. In fact, people talk about being colorblind. This program is 
colorblind. This program is open to all who need to have an 
opportunity.
  I am very proud to stand with Senators Chafee, Baucus, Warner, and 
Domenici in casting a vote that will, in fact, allow this program to 
continue. And, indeed, after I have read the new guidelines that will 
be coming out, I think this is going to be a program that all of us can 
be proud of.
  Thank you very much, Mr. President.
  Mr. SMITH of New Hampshire. Mr. President, I want to join my 
colleague from Kentucky in supporting his amendment to end one of the 
many costly, unfair, and unconstitutional minority set-aside programs 
in our federal government. As the Senator has already stated, the 
Intermodal Surface Transportation Efficiency Act (ISTEA) mandates that 
``not less than 10 percent'' of federal highway and transit funds be 
allocated to ``disadvantaged business enterprises''--firms owned by 
officially designated minority groups presumed to be ``socially and 
economically disadvantaged.''
  In 1995, the Supreme Court spoke on this issue in its Adarand versus 
Pena decision. While I will not go into detail on this decision since 
it has already been explained by the Senator from Kentucky, suffice it 
to say that both the Supreme Court and a U.S. district court have ruled 
that this minority

[[Page S1434]]

set-aside program is unconstitutional. Plain and simple, this is an 
affirmative action program for contractors. And, the Administration's 
attempt to comply with the court's decision by tinkering with DOT 
regulations does not meet the constitutional litmus test. Therefore, it 
is now incumbent on the Congress to bring ISTEA into compliance with 
our Constitution.
  It is one thing for the Federal Government to carry out unfair, 
quota-based programs, which I oppose, but it is even more egregious 
that the Federal Government mandate that our states carry out such 
programs. This is a time-consuming and costly burden on some states, 
like New Hampshire, that simply do not have a significant racial 
minority population. It forces the state into situations where it is 
either awarding contracts to less qualified contractors or jumping 
through bureaucratic hoops trying to prove that it cannot meet the 10 
percent DBE goal. Both of which are not good public policy.
  By continuing this and the other 150-plus preferential treatment 
programs, we are encouraging businesses to tie their business strategy 
to unconstitutional programs that will eventually be eliminated by the 
courts. This is sending the wrong message to minority start-up 
businesses.
  A better way to encourage minority entrepreneurs is with a small 
business out-reach program as outlined in the McConnell amendment. This 
alternative program would still provide assistance to smaller, 
minority-owned businesses without the heavy-handed mandate on our 
states.
  Most Americans do not support preferential treatment programs. We now 
have an opportunity to end one of the many race and gender-based 
programs in our federal contracting system. I urge my colleagues to 
uphold the principles of our Constitution and support the McConnell 
amendment.


                           Amendment No. 1687

  Mr. INHOFE. Mr. President, I rise today to discuss an amendment that 
I offered yesterday, amendment number 1687, to S. 1173, the ISTEA 
Reauthorization Act. This amendment was agreed to by voice vote. This 
amendment was cosponsored by Senator Breaux, Senator Byrd and Senator 
Sessions.
  The purpose of my amendment was to provide the necessary flexibility 
and funding to the States that was promised by President Clinton and 
EPA Administrator Browner for the new National Ambient Air Quality 
Standards for ozone and particulate matter. These standards were 
promulgated last July. My amendment in no way ratifies or affirms the 
underlying standards. These standards are the subject of various 
lawsuits and pending legislation which seeks to overturn the standards 
in part or in whole. This amendment simply relieves the uncertainty for 
the States during the implementation phase over the next few years.
  The President and Administrator Browner promised a flexible 
implementation time frame for the standards which was not based in the 
Clean Air Act. This amendment ensures that the implementation of the 
standards would not occur at a faster rate than the President promised.
  The first section of the amendment, Section 2(a) provides that the 
EPA will fund all of the costs for the PM monitoring network with new 
program dollars and just doesn't take money from other State grants. 
The States claim that the EPA has reprogrammed fiscal year 1998 dollars 
from existing State Grant authorities, the amendment requires that 
these funds be repaid to the States. This provides the assurance to the 
States that this will not be another unfunded mandate. It also restores 
the grant funds to the States that the EPA diverted to the monitoring 
program in 1998.
  Section 2(b) ensures that the national network (designated in section 
2(a)) which consists of the PM2.5 monitors necessary to implement the 
national ambient air quality standards will be established by December 
31, 1999. EPA will have received the funding from Congress and they 
will be responsible for ensuring that the network will be in place. If 
they fail, they will be subject to legal action and must explain the 
cause of any delay.
  Section 2(c) requires that the PM monitoring network be in place and 
that the States have three years of monitoring data before the 
Governors are required to submit their recommendations to the EPA. 
Under the Clean Air Act the Governors must examine the data and notify 
EPA when an area in their State violates the standards. This will stop 
the possibility of the EPA being sued by a citizens group demanding 
that an area be classified before the data has been collected. The 
Clean Air Act does not require the monitoring data to be collected 
first. But the President and the EPA promised they would wait for the 
three years of data. This provision provides the legal authority to 
wait for the data.
  Section 2(d) follows the Clean Air Act and the EPA's implementation 
schedule, it is the EPA's official review of the Governor's 
recommendations. It ensures that the Governor's data and information is 
correct and allows EPA the time to publish the decision in the Federal 
Register.
  Section 2(e) addresses the concerns of the farmers who believe that 
they will be targeted for PM 2.5 even though their emissions are larger 
than 2.5. The study will examine the monitoring devices to ensure that 
they do not capture larger particles. This section is endorsed by the 
American Farm Bureau who wrote, ``The agriculture community continues 
to be concerned over the accuracy of EPA's fine particulate 
measurements, especially in regard to agriculture emissions. Testimony 
has been given in both the Senate and House Agriculture Committees 
indicating concern that agriculture would be `misregulated' due to 
inaccurate fine particulate measurements. This amendment will allow a 
comparison of EPA's approved method used to measure fine particulate 
and the new monitors to find if both adequately eliminate those 
particles that are larger than 2.5 micrograms in diameter.''
  Section 3(a) follows the EPA's and the President's timeline for 
allowing the Governors two years to review the current ozone programs 
before they have to designate nonattainment areas. It allows the 
Governors to review the other ozone programs such as the new regional 
ozone transport program before they make new decisions about the new 
ozone standard.
  Section 3(b) follows the Clean Air Act and the EPA's implementation 
schedule, it is the EPA's official review of the Governor's 
recommendations. It ensures that the Governor's data and information is 
correct and allows EPA the time to publish the decision in the Federal 
Register.
  Finally, Section 4 protects the pending lawsuits so that others can 
raise the issues of Unfunded Mandates, Small Business Review, the 
validity of the standards, and other issues without having this 
amendment impede their legal rights. It affirmatively states that this 
amendment is not a ratification of the new standards and any and all 
legal challenges to the standards are still valid and real.
  The PRESIDING OFFICER. Who yields time?
  Mr. CHAFEE. Mr. President, we have completed on this side.

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