Associated Builders and Contractors v. Patricia Shiu
773 F.3d 257, 413 U.S. App. D.C. 239, 30 Am. Disabilities Cas. (BNA) 1793 (2014)
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Rule of Law:
A federal agency's statutory authority to require contractors to take "affirmative action" is broad enough to permit regulations that mandate data collection on job applicants' disability status and establish a nationwide aspirational utilization goal, so long as the agency provides a rational explanation for these measures.
Facts:
- Congress enacted Section 503 of the Rehabilitation Act of 1973, requiring federal contractors to take "affirmative action" to employ and advance qualified individuals with disabilities.
- The Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) was delegated authority to implement Section 503.
- For many years, OFCCP regulations only required contractors to invite individuals who had already been offered a job to self-identify as having a disability.
- Concerned by persistent low employment rates for individuals with disabilities, OFCCP initiated a rulemaking process in 2010 to strengthen its regulations.
- In 2013, OFCCP issued a Final Rule with two significant changes challenged in this case.
- First, the new rule requires contractors to invite all job applicants, not just those offered a job, to voluntarily self-identify as an individual with a disability.
- Second, the rule establishes a 7% "utilization goal" as a nationwide benchmark against which contractors must measure their employment of individuals with disabilities, derived from American Community Survey (ACS) data.
- Associated Builders and Contractors, Inc. (ABC), a trade association whose members are federal contractors, became subject to these new, more stringent requirements.
Procedural Posture:
- Associated Builders and Contractors, Inc. (ABC) sued officials from the Department of Labor in the United States District Court for the District of Columbia.
- ABC's lawsuit challenged a new federal regulation, arguing it exceeded the agency's statutory authority and was arbitrary and capricious.
- The district court granted summary judgment in favor of the Department of Labor, upholding the regulation.
- ABC, as the appellant, appealed the district court's grant of summary judgment to the United States Court of Appeals for the District of Columbia Circuit.
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Issue:
Does the Department of Labor's regulation, which requires federal contractors to collect disability data from all job applicants and adopt a 7% utilization goal for hiring individuals with disabilities, exceed the Department's statutory authority under Section 503 of the Rehabilitation Act or constitute an arbitrary and capricious agency action?
Opinions:
Majority - Tatel, Circuit Judge
No. The Department of Labor's regulation does not exceed its statutory authority, nor is it an arbitrary and capricious action. The authority granted by Section 503 of the Rehabilitation Act to require "affirmative action" is broad and does not unambiguously foreclose the agency's interpretation. Under Chevron step one, the statute's language does not limit affirmative action to post-offer activities; the word "qualified" describes the beneficiaries, not the scope of the action. The court rejected the argument that congressional silence on previous, less stringent regulations amounted to an endorsement, stating that powers are not lost by being dormant. Under Chevron step two, the agency's construction is permissible. Furthermore, the regulations survive arbitrary and capricious review. The agency provided a rational explanation for the rule, connecting the data collection and utilization goals to the problem of underemployment among individuals with disabilities. OFCCP reasonably justified the need for applicant-level data to evaluate recruitment efforts and adequately explained its methodology for creating the 7% goal using the best available data, despite its acknowledged limitations. The agency's refusal to exempt the construction industry was also found to be a product of reasoned decisionmaking.
Analysis:
This decision reinforces the significant deference courts grant federal agencies in interpreting and implementing broad statutory mandates under the Chevron framework. It affirms that an agency's power is not constrained by its prior, less aggressive enforcement policies; an agency may strengthen regulations as long as it provides a reasoned basis for the change. The case also demonstrates that in an arbitrary and capricious review, an agency can rely on imperfect but best-available data to formulate national standards, so long as it acknowledges the data's limitations and explains its reasoning. For regulated parties, this ruling signals that broad statutory terms like "affirmative action" can be translated by agencies into highly specific, data-driven compliance obligations.
