[Federal Register Volume 78, Number 43 (Tuesday, March 5, 2013)]
[Proposed Rules]
[Pages 14238-14241]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-04955]
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DEPARTMENT OF COMMERCE
Minority Business Development Agency
15 CFR Part 1400
[Docket No. 121130667-2667-02]
Determination of Group Eligibility for MBDA Assistance
AGENCY: Minority Business Development Agency, Commerce.
ACTION: Response to petition.
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SUMMARY: On January 11, 2012, the Minority Business Development Agency
(MBDA) received a petition from the American-Arab Anti-Discrimination
Committee (ADC or Petitioner) requesting designation of the Arab-
American community as a socially or economically disadvantaged group
whose members are eligible for MBDA assistance. This document announces
MBDA's determination that the ADC Petition is not currently supported
by sufficient evidence to establish social or economic disadvantage as
required by the MBDA regulations and applicable legal precedent.
FOR FURTHER INFORMATION CONTACT: Kimberly Marcus, Associate Director
for Legislation, Education, and Intergovernmental Affairs, Minority
Business Development Agency, 1401 Constitution Ave., Room 5065,
Washington, DC 20230, (202) 482-6272.
[[Page 14239]]
SUPPLEMENTARY INFORMATION: Pursuant to Executive Order 11625 (E.O.
11625), MBDA provides management and technical assistance to minority
business enterprises (MBEs) through its services and programs. A
minority business enterprise for purposes of E.O. 11625 is defined as a
business owned or controlled by one or more socially or economically
disadvantaged individuals.\1\
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\1\ 15 CFR 1400.1(b) (1984).
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E. O. 11625 and subsequent MBDA regulations have designated the
following groups whose members are currently considered socially or
economically disadvantaged and therefore eligible to receive MBDA
assistance: \2\ Blacks, Puerto-Ricans, Spanish-speaking Americans,
American Indians, Eskimos and Aleuts, Hasidic Jews, Asian Pacific
Americans, and Asian Indians.\3\ In order for a group to become
eligible for MBDA's services, the group must submit a petition to MBDA
demonstrating, by a preponderance of the evidence, that the group is
socially or economically disadvantaged.\4\
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\2\ See Executive Order 11625, sec. 6 (1971); 15 CFR 1400.1(b)
and (c) (1984).
\3\ 15 CFR 1400.1(b) and (c) (1984).
\4\ Id. at Sec. 1400.4(a).
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On May 30, 2012, MBDA published a notice of proposed rulemaking and
a request for comments in the Federal Register announcing receipt of a
petition from the ADC seeking designation of Arab-Americans as a
socially or economically disadvantaged group and requesting public
comment on this designation.\5\ In particular, the notice requested
comment on and evidence concerning the extent to which Arab-Americans
are economically disadvantaged. Comments were accepted from the public
for a 30 day period until June 29, 2012, and were posted with the
petition on MBDA's Web site.
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\5\ Petition for Inclusion of the Arab-American Community in the
Groups Eligible for MBDA Services, 77 FR 31,765-31,767 (May 30,
2012). If the applicant has submitted a Petition for formal
designation as a socially or economically disadvantaged group, ``the
Department of Commerce will publish a notice in the Federal Register
that formal designation of this group will be considered''
requesting comments that will help in making a final determination.
See 15 CFR 1400.5. MBDA extended the deadline for making its
decision until March 1, 2013. See Petition for Inclusion of the
Arab-American Community in the Groups Eligible for MBDA Services, 77
FR 72254 (December 5, 2012).
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In response, the Agency received 37 comments. Of these comments, 19
were in support of ADC's petition, while 13 expressed opposition, and
five were disqualified for use of offensive or derogatory language.
After careful review of the application and comments as well as
independent research, MBDA has determined that the Petition is not
currently supported by sufficient evidence to prove the necessary
elements of social or economic disadvantage within the specific
requirements of 15 CFR 1400.4(a) of the MBDA regulations and applicable
case law.
Procedural Requirements for Determination of Group Eligibility for MBDA
Assistance
A group applying for designation as socially or economically
disadvantaged within the meaning of the MBDA regulations must submit a
written application to the Minority Business Development Agency
containing a statement of request, a detailed description of the
applicant group delineating sufficiently distinctive traits of its
members, a brief summary of the submission, a narrative description of
documentation in support of the claim, and a conclusion.\6\ Along with
an adequate petition, MBDA must consider the comments received and may
also consider any additional information gathered by the Agency from
independent research.\7\
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\6\ 15 CFR 1400.3 (1984).
\7\ Id. at Sec. 1400.5.
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On January 11, 2012, the ADC filed a petition on behalf of the
Arab-American community, requesting that MBDA designate Arab-Americans
as a socially or economically disadvantaged group. The Petition defines
the Arab-American group as persons who can trace their ancestry to one
of the Arabic-speaking countries or areas of the world categorized as
Arab countries.
According to the Petition, these countries include, but are not
limited to: Algeria, Bahrain, Djibouti, Egypt, Iraq, Jordan, Kuwait,
Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Somalia, Saudi
Arabia, Sudan, Syria, Tunisia, United Arab Emirates, and Yemen.\8\ The
Petition included Census data showing 1.2 million Americans who report
Arab ancestry.\9\ The Petition also includes a description of unique
cultural and ethnic traits such as common Arabic language, traditional
music, unique food, as well as an Arab-American press catering to this
community.
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\8\ American-Arab Anti-Discrimination Committee Petition for
Determination of Group Eligibility for MBDA Assistance (filed,
January 11, 2012) at 3 (ADC Petition or Pet.). The Petition also
includes Palestinian-Americans within this group.
\9\ Pet. at 4 (citing Arab American Institute, Demographics:
Religion (2002 Zogby International Survey), http://www.aaiusa.org/arabamericans/22/demographics (last visited December 30, 2011)). See
also De la Cruz, G. Patricia and Brittingham, Angela. US Census
Bureau Census 2000 Brief, The Arab Population: 2000 (December 2003)
available at http://www.census.gov/prod/2003pubs/c2kbr-23.pdf.
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As required by its regulations, MBDA published the Petition in the
Federal Register for 30 days and requested general comments and
comments on specific social and economic issues related to Arab-
Americans. This is the first time that MBDA has considered the
inclusion of a group on the basis of racial or ethnic classification
under the regulations set forth in 15 CFR 1400.1 through 1400.6 MBDA
published several notices extending the time period for making a
decision in order to consider fully the issues presented by the
Petition, to conduct independent research, and to consider the
implications of relevant legal precedent.\10\ These issues are
addressed below.
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\10\ Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).
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Substantive Requirements for Group Eligibility
For a group to become eligible for MBDA's services, it must submit
a petition to MBDA demonstrating, by a preponderance of the evidence,
that the group is socially or economically disadvantaged. The
regulations at section 1400.2(b) define socially disadvantaged persons
as ``persons who have been subjected to cultural, racial or ethnic
prejudice because of their identity as members of a group without
regard to their individual qualities.'' Section 1400.2(c) of the
regulations defines economically disadvantaged persons as ``persons
whose ability to compete in the free enterprise system has been
impaired due to diminished capital and credit opportunities because of
their identity as members of a group without regard to their individual
qualities, as compared to others in the same line of business and
competitive market area.'' The petition must prove that the social or
economic disadvantage has produced impediments in the business world
for members of the group which are not common to all business people in
the same or similar business and marketplace.
The regulations also set out several nonexclusive categories of
evidence that will be considered including: national income level and
standard of living statistical data; evidence of employment and
educational discrimination; evidence of denial of access to
educational, professional, and social organizations; the kinds of
business opportunities available to members of the group; the
availability of capital, technical, and managerial resources;
[[Page 14240]]
and any other evidence of denial of opportunity or access to those
things that would enable successful participation in the American
economic system.\11\ While the petitioner has the burden of providing
sufficient evidence to meet the standard, MBDA as trier of fact may
gather additional information which supports or refutes the group's
request.\12\
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\11\ 15 CFR 1400.4(b) (1984).
\12\ Id. at Sec. 1400.5 (1984).
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Since the promulgation of the MBDA regulations, the U.S. Supreme
Court issued its opinion in Adarand v. Pena, which applied strict
scrutiny to government programs that rely on racial
classifications.\13\ To the extent that it applies, strict scrutiny
analysis requires that in order to meet a constitutional challenge, the
program must serve a compelling government interest and must be
narrowly tailored to serve that interest. Courts have repeatedly found
that the government has a compelling government interest in rectifying
past discrimination caused by the government and in not passively
participating in private systems of discrimination. To establish that
compelling interest, the government must show a strong basis in
evidence that a race based program is necessary to remedy racial or
ethnic discrimination. Courts usually rely on a showing that includes
statistical evidence of underrepresentation or underutilization in
finding that the ``strong basis in evidence'' standard has been met.
Therefore, to ensure that its programs meet constitutional standards as
applicable, MBDA requires a group seeking eligibility for MBDA programs
to provide substantial evidence of impediments in the business world to
show a need for extending the program to that group.
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\13\ Adarand Constructors, Inc. v. Pena, 515 U.S. 200 (1995).
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Social or Economic Disadvantage Evidentiary Standard
In order to establish social or economic disadvantage for purposes
of MBDA programs, a petition must present evidence of either social or
economic disadvantage that meets each prong of the standard set out in
the regulation.
For social disadvantage, the petition must present evidence
establishing that the group has been subjected to cultural, racial, or
ethnic prejudice because of their identity as members of a group
without regard to their individual qualities.\14\ The petition must
show that the social disadvantage created by such prejudice is chronic,
long standing, substantial, and beyond the control of the group's
members. Finally, the evidence must demonstrate that the social
conditions experienced by the group have produced impediments in the
business world for members of the group that are not common to those
faced by all business people in the same or similar businesses or
marketplaces.\15\
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\14\ 15 CFR 1400.2(b).
\15\ Id. at Sec. 1400.4(a).
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For economic disadvantage, the petition must present evidence
demonstrating that members of the group have had their ability to
compete in the free enterprise system impaired due to diminished
capital and credit opportunities because of their identity as members
of the group without regard to their individual qualities, as compared
to others in the same line of business and competitive market areas.
The evidence in the petition must establish that the economic
disadvantage created by such prejudice is chronic, long standing,
substantial, and beyond the control of the group's members, as compared
to others in the same line of business or market area. Finally, the
economic conditions must have produced impediments in the business
world for the group that are not common to those faced by all business
people in the same or similar businesses or marketplaces.\16\
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\16\ Id. Sec. 1400.4(a).
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Application of Standard to Arab-American Petition
MDBA has reviewed the evidence presented in the Petition and the
comments, as well as its own recognition of barriers Arab-Americans
have faced, and has determined that, while there is qualitative
evidence that demonstrates that Arab-Americans have faced significant
prejudice in numerous instances, there is insufficient evidence that
this undeniable prejudice has impaired their ability to compete in the
free enterprise system due to diminished capital and credit
opportunities. In addition, the available evidence does not, for
purposes of this program, adequately show chronic, long standing, and
substantial bias that has produced impediments in the business world
for members of the group that are not common to all business people in
the same or similar business and market place.\17\
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\17\ In the absence of sufficient evidence in the Petition and
comments, the Agency searched sources available to it and was unable
to locate the type of statistical or empirical studies necessary to
establish this element both for purposes of the regulation and as
required to meet constitutional standards under existing case law.
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The Petitioner adduces evidence that Arab-Americans have faced
significant prejudice in the form of hate crimes and other adverse
treatment based on characteristics, distinct clothing, or self-
identification.\18\ The Petition illustrates a sharp increase in
prejudice since 9/11 by citing the Senate testimony of Assistant
Attorney General Thomas E. Perez, that ``more than 800 incidents
involving violence, threats, vandalism, and arson against persons
perceived to be Muslim or to be of Arab, Middle Eastern, or South Asian
origin'' were investigated by the Department of Justice between 2001
and 2011.\19\ The testimony also highlights a 1,600 percent increase in
reports to the FBI of discrimination and harassment of Arab-Americans
following 9/11. An ADC report submitted in support of the Petition
demonstrates a rise in the level of employment discrimination
complaints filed by Arab-Americans in the period following 9/11 and
includes instances where employees were released without explanation or
were called derogatory names in the workplace, which led to their
subsequent resignation.\20\ This increase in prejudicial treatment is
also suggested by evidence from the Equal Employment Opportunity
Commission (EEOC) documenting 1,035 charges filed under Title VII
alleging post-9/11 backlash employment discrimination.\21\
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\18\ Pet. at 15-16, 18, 23-25.
\19\ Id. at 17 (citing Statement of Thomas E. Perez, AAG Civil
Rights Division before Senate Judiciary Subcommittee on the
Constitution, Civil Rights, and Human Rights ``Protecting the Civil
Rights of Muslim Americans'' March 29, 2011 available at http://www.judiciary.senate.gov/hearings/testimony.cfm?id=e655f9e2809e5476862f735da169475f&wit_id=e655f9e2809e5476862f735da169475f-1-0).
\20\ Id. at 23 (citing 2003-2007 Report on Hate Crimes and
Discrimination against Arab Americans, American-Arab Anti-
Discrimination Committee Research Institute at 34-38 (2008),
available at http://www.adc.org/PDF/hcr07.pdf).
\21\ Id. at 25.
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The Petition and supporting evidence demonstrates that, in too many
instances, Arab-Americans have faced prejudice that has resulted in
incidents of violence, assault, and other undeniably adverse
treatment.\22\ But the Petition fails to connect this evidence to a
showing of impediments in the business world for members of the group
that are not common to all business people in the same or similar
business and marketplace. Nor does the Petition establish that Arab-
Americans have had their ability to compete in the
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free enterprise system impaired due to diminished capital and credit
opportunities.
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\22\ However, nothing in the forgoing discussion or any other
part of this response to petition should be construed as MBDA's
acceptance of the Petition's assertions that the federal government
has discriminated against Arab-Americans.
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Specifically, the Petition fails to provide evidence of the type
MBDA requires to establish a relationship between any discriminatory
treatment and business impediments experienced by Arab-American
businesses as a group that are not common to all business people in the
same or similar market place. Section III of the Petition states that:
Arab-Americans suffer from discrimination, prejudice and
cultural bias in the workplace. This employment discrimination has
produced obstacles in the business world for Arab-Americans--both as
employees and entrepreneurs. Members of the group have no control
over such discrimination. Other entrepreneurs and individuals,
outside of the group, do not suffer from such discrimination and
bias.\23\
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\23\ Id. at 21.
But, the Petition does not substantiate this assertion by providing
evidence to support the statement, such as statistical measures of the
impact that employment discrimination complaints have on Arab-American
business success or workplace attainment. The EEOC complaints discussed
above must be coupled with an analysis or study of the impact of
discrimination on Arab-Americans in the business world.
In addition, a 2008 Arab American Institute Foundation study
produced results contrary to the Petitioner's arguments. This study
found that Arab-American households' mean individual income is 27%
higher than the national average and that the group shows higher than
average educational attainment.\24\ These figures are not dispositive,
but do suggest that prejudice Arab-Americans have faced may not have
impacted their economic opportunities to the extent necessary to
establish that Arab-Americans' businesses require the technical and
outreach services that MBDA provides.
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\24\ Comment of Nicholas Legendre, http://www.mbda.gov/sites/default/files/AAPetitioncomments_asof062912.pdf at 56 (citing Arab
American Institute Foundation, Quick Facts About Arab Americans,
http://aai.3cdn.net/afbc33810b07728c5a_oim6bx98f.pdf).
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The Petition also does not establish with the necessary type of
evidence that Arab-Americans have experienced diminished capital and
credit opportunities. The descriptions of immigration controls,
employment discrimination complaints, and post-9/11 programs that the
Petition states target Arab-Americans do not demonstrate that Arab-
Americans are unable to compete in the free enterprise system due to
diminished capital and credit opportunities. Statistical or empirical
evidence demonstrating a relationship between the discrimination
suffered by the group and business impediments, or impaired access to
capital, credit, contracts, and other business opportunities
experienced by the group is necessary to show the social or economic
conditions required to qualify the Petitioners for eligibility for
MBDA's programs that assist businesses in obtaining access to capital,
credit, contracting, and other business opportunities. The comments
submitted in support of the Petition similarly lack this supporting
information.
Accordingly, MBDA does not currently have sufficient evidence to
recognize the Arab-American community as a minority group that is
socially or economically disadvantaged within the specific meaning of
the regulation because the Petition is not supported by sufficient
evidence to meet the necessary elements of social or economic
disadvantage as required by 15 CFR 1400.4(a) of the MBDA regulations
and applicable case law. As such, MBDA has returned the Petition to ADC
for further consideration consistent with this response to petition.
Dated: February 27, 2013.
David Hinson,
Director.
[FR Doc. 2013-04955 Filed 3-4-13; 8:45 am]
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