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Guidance for Diversity in Airport Business Contracting and Workforce Programs (2020)

Chapter: Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations

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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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Suggested Citation:"Chapter 2 - Approaches and Techniques for Understanding the Parameters of Laws and Regulations." National Academies of Sciences, Engineering, and Medicine. 2020. Guidance for Diversity in Airport Business Contracting and Workforce Programs. Washington, DC: The National Academies Press. doi: 10.17226/25896.
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8 A section of notes at the end of this chapter provides additional information on relevant laws and lawsuits. Federal Regulations Several federal statutes and regulations apply to U.S.DOT-funded contracts. Two of the regu- latory statutes most familiar to airport personnel are the DBE program set forth in 49 Code of Regulations (CFR) Part 26 and the Airport Concessions Disadvantaged Business Enterprise (ACDBE) program set forth in 49 CFR Part 23. This section of the report provides a high-level, brief overview of these statutes’ key regulatory provisions, with a focus on practical illustrations of how airports can set targets to achieve their goals for DBE and ACDBE participation under these regulations. For an in-depth explanation of Parts 23 and 26 and relevant constitutional considerations, please refer to Chapter 2, Federal Disadvantaged Business Enterprise Programs, in ACRP Report 126: A Guidebook for Increasing Diverse and Small Business Participation in Airport Business Opportunities (Exstare 2015). 49 CFR Part 26—DBE Program The DBE program aims to increase the participation of minority- and woman-owned busi- nesses in state and local transportation projects that are funded in whole or in part by the U.S.DOT through the FAA, the FHWA, and the FTA. Airport owners, sponsors, planning agencies, or other organizations that accept funds from FAA-administered financial grants are required by Part 26 to implement and enforce the DBE program (Section 26.3(a)).i Airports must also agree to certain obligations known as grant assurances, which require state and local governments, transportation agencies, and private entities working on U.S.DOT-funded projects to include nondiscrimination provisions in prime contracts, as well as in each subcontract a prime contractor signs with a subcontractor (49 CFR Sections 26.13 and 23.9(c)(1)–(2)). In terms of administering the DBE program, airports must follow certain guidelines detailed in full under Part 26. Administrative requirements include: • Airports must maintain records and bidders lists of DBE and non-DBE contractors and sub- contractors that seek to work on federally funded contracts. • Airports must maintain a directory that identifies all certified DBEs. The directory must contain the firms’ contact information, including addresses and phone numbers. In addi- tion, the directory must specify the type of work the firms are certified to perform as DBEs (Section 26.31(a)). C H A P T E R 2 Approaches and Techniques for Understanding the Parameters of Laws and Regulations

Approaches and Techniques for Understanding the Parameters of Laws and Regulations 9 • Airports must designate a DBE Liaison Officer (DBELO), who is responsible for implementing the DBE program. As part of this process, the DBELO must have direct and independent access to the airport’s chief executive officer (Section 26.25). • Airports must investigate the type of services offered by financial institutions in the local community that are owned and controlled by socially and economically disadvantaged indi- viduals. The airport must make a good faith effort to use these financial institutions and must encourage their prime contractors to use these financial institutions (Section 26.27). • Airports must have a “prompt payment” clause in all federally funded contracts. This clause requires contractors to pay their subcontractors within 30 days of receipt of prime contract payments. In addition, this clause must establish enforcement mechanisms to guarantee prompt payments to subcontractors (Section 26.29(a)-(d)). • Airports must have an implementation mechanism for the DBE program that facilitates small business competition (Section 26.39(a)). • Airports must set a total DBE participation goal for all U.S.DOT-assisted contracts (Section 26.45(a)). U.S.DOT provides a Sample DBE Program on its website to help grant recipients comply with 49 CFR Part 26. The Sample DBE Program is accessible at https://www.faa.gov/about/office_ org/headquarters_offices/acr/bus_ent_program/dbe_program_adm/media/Sample_DBE_ PROGRAM_Revised.pdf. Although the Sample DBE Program does not provide step-by-step instructions, it includes guidance on the information required to be included in a recipient’s DBE program. Use of FAA’s Sample DBE Program document is not a requirement, but it does serve as a recommended starting point for developing the airport’s DBE program. During the implementation phase, airports should design and implement DBE programs based on the unique circumstances of the airport. However, all program designs must satisfy the require- ments set forth in Section 26.45. Many airports of varying sizes publish their DBE programs and policies documents, including their goal methodologies, on their websites. These documents typically include the airport’s objectives and policy statement for the DBE program and indicate how the airport administers its program to meet 49 CFR Part 26. U.S.DOT provides tips for goal setting at https://www.transportation.gov/civil-rights/ disadvantaged-business-enterprise/tips-goal-setting-disadvantaged-business-enterprise. Steps airports undertake to establish targets for an overall DBE participation goal for federally funded contracts over a 3-year period, and the requirements for implementing the overall goal, include: • Step 1—Developing the overall goal requires the airport to determine a base figure for DBE participation based on the availability of DBEs in its own market area. The base figure can be estimated using sources such as DBE directories, U.S. Census Bureau data, bidders’ lists, the goals of a similar U.S.DOT recipient in an identical or closely comparable market, and disparity studies. • Step 2—Once a base figure has been calculated, the airport should determine whether an adjustment is necessary to account for DBE availability, taking into account factors such as the current capacity of DBEs to perform work in the airport’s U.S.DOT-assisted contracting program or evidence from disparity studies conducted anywhere within the airport’s jurisdic- tion that were not already factored into the base estimate. Airports are not required to make a Step-2 adjustment as long as they consider appropriate factors and explain their methodology. While developing the DBE goal, the airport is required to consult with stakeholders such as minority and women’s contractor groups, local community organizations, and any other groups that would be expected to have information about the availability of disadvantaged and non-disadvantaged businesses and the effects of discrimination on opportunities for DBEs. • Step 3—After the DBE goal has been established, the airport must post the proposed DBE target on its website. The airport can, at its discretion, inform the public that the proposed overall goal and its rationale are available for inspection during normal business hours at the

10 Guidance for Diversity in Airport Business Contracting and Workforce Programs airport’s principal office for a 30-day public comment period before submission to FAA by the August 1 deadline. • Step 4—Following the public comment period, the proposed overall goal and the methodology used to establish it must be submitted to the U.S.DOT for approval for each 3-year period. Airports are only eligible to receive grant funds once the FAA has approved the airport’s DBE Program Plan. • Step 5—After the DBE plan has been FAA approved, the airport must try to meet the race- gender-neutral and/or race-gender-conscious goals it has established. The specific U.S.DOT rules and constitutional issues governing the use of race- and gender-conscious means are detailed in Part 26 and should be reviewed carefully by the airport’s diversity office and legal staff. While airports are not required to meet their specific DBE goals, they must demonstrate good faith efforts to do so and provide an analysis to the FAA of why they fell short of their goal in any given year. Failure to comply with the plan or to monitor and enforce the plan according to U.S.DOT regulations can result in official action such as sanctions, which may include suspension or termination of federal funds. 49 CFR Part 23—ACDBE Program The ACDBE program, like the DBE program, is designed to level the playing field for small businesses that wish to participate in concession contracting opportunities at airports. Federally assisted airports must therefore develop, implement, and enforce nondiscrimination programs which call for the active participation of concession businesses owned and operated by socially and economically disadvantaged owners. Specifically, 49 CFR Part 23 requires airports to satisfy the non- discrimination requirements provided in Part 26 (Section 26.7) as they relate to the award and performance of concession agreements, management contracts and subcontracts subject to Part 23, purchase agreements or leases, or other types of contracts. The U.S.DOT’s requirements for implementing the ACDBE program are detailed in Part 23 and in Chapter 2 of ACRP Report 126: A Guidebook for Increasing Diverse and Small Busi- ness Participation in Airport Business Opportunities (Exstare 2015). In summary, the regulations require airports to issue and circulate a policy statement detailing the objectives of the ACDBE program and the airport’s commitment to it, and identifying the responsibilities for the program’s implementation. U.S.DOT provides a Sample ACDBE Program on its website to help airports comply with 49 CFR Part 23. The Sample ACDBE Program is accessible at https:// www.faa.gov/about/office_org/headquarters_offices/acr/bus_ent_program/dbe_program_ adm/. Although the Sample ACDBE program does not provide step-by-step instructions, it includes guidance on the information required to be included in a recipient’s ACDBE program. Use of FAA’s Sample ACDBE Program document is not required, but it serves as a recom- mended starting point for developing an airport’s ACDBE program. As with the DBE program, airports must set aspirational 3-year overall goals for ACDBE participation in their concession opportunities (Section 23.41(c)), and design program measures to meet the goals through neutral or race- and gender-conscious measures (Section 23.25). Airports must submit goals to the FAA after consulting with stakeholders (Section 23.43), and the goals must be calculated based on ACDBE availability in the airport’s concessions market(s) (Section 23.51(b)(1)). Two overall ACDBE participation goals must be established, one for car rentals and one for concessions other than car rentals (Section 23.41 (a)); goal setting must be completed separately for each (Section 23.51(a)(3)). Similar to the DBE program, many airports Leveling the Playing Field Both the DBE and ACDBE programs aim to “level the playing field” for disadvan- taged small businesses by requiring equal access to U.S.DOT-funded contracts and airport concession opportunities.

Approaches and Techniques for Understanding the Parameters of Laws and Regulations 11 publish ACDBE goal policies and procedures on their websites and outline the process for setting and achieving ACDBE goals (see Section 23.51). Airport Approaches and Techniques in Addressing Parts 23 and 26 Airports value a diverse pool of contractors and concessionaires. The most common approach employed by airports to increase the number and diversity of contractors is outreach to the business community. Outreach is conducted in different ways, most notably (1) providing both general and targeted online notice of business opportunities; (2) hosting “meet and greet” or networking meetings where businesses meet airport staff and potential business partners; (3) having staff members be active in the community; and (4) engaging in extensive pre-contract award outreach to potential contractors and concessionaires during a request for bids/proposals process. Airports strive to break down barriers to DBE/ACDBE participation through the administra- tion and management of their contract and concessions opportunities. During the performance of the contract or operation of the concession, airports closely monitor DBE/ACDBE participation. Airports conduct disparity studies to assist them in increasing the diversity of their contractor and concessionaire pools. Disparity studies help airports assess the availability, capacity, and qualifications of contractors for the airport’s contracts and concessions, as well as address barriers that may impact minority- and woman-owned businesses and make recommendations for diversity program enhancements. Airports also offer technical, bonding/insurance, and certification assistance to small busi- nesses. As an illustration, Portland International Airport has a mentor-protégé program that pairs DBEs with larger businesses that provide mentorship and help the DBE grow into a more stable enterprise over a 3-year period. The program, started in 1995, has seen over 120 businesses graduate. Local Business Participation Programs This section showcases how airports and their business partners advocate for local business participation programs as a vehicle to increase diverse business participation, and how airports can implement geographic preference policies in concert with federal requirements for DBE and ACDBE programs. Although Part 23 and Part 26 generally prohibit favoritism toward local businesses in the award of federally funded contracts,ii these same regulations expressly allow grant recipients to harmonize state and local requirements with their DBE and ACDBE plans, subject to certain legal limitations.iii Part 23 provides guidance to airports that wish to integrate state and local requirements into their implementation of the federal ACDBE program. • First, the airport must provide a copy of the state or local law, regulation, or policy to the FAA when submitting its implementation of the ACDBE program (Section 23.77(b)–(d); see also 70 Fed. Reg. 14496, 14507 (Mar. 5, 2005)). • Next, the FAA will determine whether the law, regulation, or policy conflicts with the ACDBE program (Section 23.77(b)). • If the FAA determines that the law, regulation, or policy is not in conflict with the ACDBE program, the airport must write and administer the state or local law, regulation, or policy separately from its implementation of the ACDBE program (Section 23.77(c)).

12 Guidance for Diversity in Airport Business Contracting and Workforce Programs Thus, there must be “a separate program document for [the state or local laws, regulations or policies], and the Federal and state/local additional programs, respectively must be administered in a clearly distinct manner” (70 Fed. Reg. 14496, 14507 (Mar. 5, 2005)). Part 26 does not specifically address preemption, or how an airport should integrate a state or local law, regulation, or policy into its implementation of the federal DBE program. It would be prudent, however, for an airport recipient to follow the procedures set forth in Part 23 and to submit to the FAA for approval, as part of its DBE plan, the state or local laws that it would like to apply. Policies and programs to promote and retain local business participation in an airport’s contracts and concessions can be successfully designed and implemented to maximize the participation of diverse businesses. Illustrative examples include: • Columbia Metropolitan Airport (CAE), a small hub airport in Columbia, South Carolina, adopted a Diversity & Cultural Master Plan that addresses the airport’s business diversity, nondiscrimination, and affirmative action programs. After the plan was fully implemented, CAE reached a significantly higher percentage of small, local, and diverse business participa- tion in its contracting opportunities than before the plan was adopted. More recently CAE initiated a small business opportunity program (Community Outreach Leasing Agreement or COLA), which provides small kiosks where micro concessionaires can present their offerings to the traveling public during short lease terms, like a pop-up display. Further details about CAE’s diversity efforts appear in Appendix A—Case Studies. • San Diego International Airport (SAN), a large hub airport in California, has implemented practices and policies with a robust small business development focus. Among other efforts, SAN works closely with contractors to split projects into small packages when feasible, to allow small businesses the opportunity to bid on them. SAN has an active community rela- tions component that facilitates regular speaking appearances at community events and meetings to discuss SAN’s small business programs. SAN partners with Turner Construction Company’s Turner School of Construction Management twice a year, when small businesses learn how to successfully do business with the airport. These efforts incentivize the interest and participation of small, local, and diverse businesses in the airport’s contracts. Further details about SAN’s diversity efforts are included in Appendix A. Airports and their legal counsel need to be mindful of state laws mandating that certain contracts be awarded to the lowest responsive and responsible bidder, as these laws pose a poten- tial threat to local hire statutes and ordinances. Courts have struck down municipal preference ordinances when they have been found to violate state competitive bidding statutes (Associates Builders & Contractors, Inc. v. City of Rochester, 67 N.Y.2d 854 (1986)).iv Chapter 4 of this report provides guidance on increasing the availability and capacity of local and small contractors and concessionaires, including diverse firms, for contract and concessions opportunities. Workforce Diversity Legal Considerations Although employers, including government-funded agencies, may implement race- and gender-conscious programs to remedy unlawful discrimination, any preference based on racial or ethnic criteria must receive a most searching examination to make sure that it does not conflict with constitutional guarantees. The U.S. Supreme Court and the federal circuit courts of appeals have provided legal guidance on the proper parameters for these types of race- and gender-conscious programs and policies.

Approaches and Techniques for Understanding the Parameters of Laws and Regulations 13 Initiatives or efforts to diversify internal or external workforces based on the race or ethnicity of the employees must survive strict judicial scrutiny. Under the strict scrutiny test, programs creating preferences based on race and ethnicity must have “strong basis in evidence” and must also be “narrowly tailored” in order to survive judicial scrutiny (City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)); see also Engineering Contractors Ass’n v. Metropolitan Dade County, 122 F.3d 895, 906 (11th Cir. 1997); see also Constr., Inc. v. New York State Dep’t of Econ. Dev. 438 F.3d 195, 200 (2nd Cir. 2006); Monterey Mech. Co. v. Wilson 125 F.3d 702, 712 (9th Cir. 1997). A “strong basis in evidence” is best shown by “a significant statisti- cal disparity between the number of qualified minorities . . . willing and able to perform a particular service and the number of such [minori- ties] actually engaged.” (Croson, 488 U.S. at 509). A race-conscious program can also rely on anecdotal evidence of discrimination to complement statistical evidence (although anecdotal evidence alone is generally not enough). Whether a race-conscious program is narrowly tailored typically involves four considerations, including (1) the utilization of race- neutral measures prior to the adoption of a race-conscious measure; (2) the basis offered for the percentage selected; (3) the presence of waivers and flexibility; and (4) whether the program is geographically tailored and not over-inclusive (Croson, 488 U.S. at 507–508). Initiatives or efforts to diversify workforces based on the gender of the employees, however, have typically only been subjected to inter- mediate judicial scrutiny. Programs creating preferences based on gender require only “sufficiently probative evidence” that the program serves “important governmental objectives” and is “substantially related” to achievement of those objectives (Engineering Contractors Ass’n, supra, 122 F.3d at 907, citing Craig v. Boren, 429 U.S. 190, 197 (1976)).v A practical guide for staying within race- and gender-conscious legal boundaries is represented by these illustrations: • An airport can implement a workforce program based on “explicit racial preferences” only if, after utilizing less discriminatory means, there remains a strong basis in evidence to justify the remedial action (Ricci v. Destefano, 530 F.3d 88, 98 (2d Cir. 2008) [“Croson and Adarand establish that racial quotas are impermissible under the Constitution absent specific findings of past discrimination”]). • An airport may implement affirmative action programs that include hiring goals (not quotas) for minority workers, which are recognized under long-established federal policy. (See, e.g., 41 CFR Section 60-2.1 et seq.; 41 CFR Section 60-2.10 [describing the general purpose and contents of affirmative action programs]; 41 CFR Section 60-2.16 [describing “placement goals” for minority and female workers]). • Making a distinction between hiring goals and hiring quotas is sometimes not enough, how- ever. In Schurr v. Resorts International Hotel, the Third Circuit disapproved a casino’s goal-oriented affirmative action plan, which had been applied to deny employment to a white technician in favor of an equally qualified Black applicant, because it had been implemented “in [t]he absence of any reference to or showing of past or present discrimi- nation in the casino industry.” The employer argued that the affirmative action plan, and the Casino Control Commission regulations on which it was based, did not create racial preferences, but simply articulated goals aimed at recruiting members of minority groups Strict Scrutiny Strict Scrutiny is the legal standard that courts use to analyze the constitu- tionality of public contracting or employ- ment programs that use race or gender in hiring or promotional decisions. Under Strict Scrutiny, a public owner or employer must show a “strong basis in evidence” for its conclusion that race- or gender-based measures are needed to remedy identified discrimination. One way to show a strong basis in evidence is through an economic disparity study. Strict Scrutiny also requires a diversity program to be “narrowly tailored.” Narrowly tailored programs are flexible, of limited duration, and closely tied to the statistical evidence of discrimination.

14 Guidance for Diversity in Airport Business Contracting and Workforce Programs and women. The court, however, concluded that the regulations “have the practical effect of encouraging (if not outright compelling) discriminatory hiring,” particularly because Resorts International supervisors who made hiring decisions testified to a belief that they had to take race into account when filling a position, if a particular job category had a lower percentage of minority employees than the stated goal. Separate from federal constitutional law considerations, airports and their legal counsel need to be mindful of state-based restrictions in their state’s constitution, statutes or judicial deci- sions. For example, in 1996 California became the first state to enact a formal ban on racial and other preferences when voters approved Proposition 209. Since then, Michigan and five other states—Florida, Nebraska, Arizona, New Hampshire, and Oklahoma—have adopted similar bans. Most of those measures include language similar or identical to Proposition 209’s key provision: that the state (including but not limited to public colleges and universities) “shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting.” In contrast, the state legislature in Washington recently enacted Initiative 1000, repealing a 20-year-old measure approved by Washington voters prohibiting the government from pref- erential or discriminatory treatment based on sex, ethnicity, color, race, or national origin. A voter-backed referendum (Referendum 88) to confirm the initiative failed in the November 5, 2019, general election. Some agencies have found ways to increase diversity without relying on race- or gender- conscious programs. Since segregation by race and income is primarily geographic, by imple- menting a race-neutral local hiring preference, agencies can use geography to achieve diversity without triggering the Equal Protection Clause’s strict scrutiny review. Public entities are also adopting project labor agreements with local hire requirements relating to infrastructure projects. Local hire programs may run afoul of other federal constitutional provisions, however, specifically the Commerce Clause, the Equal Protection Clause, and more critically, the Privileges and Immunities Clause. Public agencies have been able to overcome these legal challenges by acting as a market participant [Commerce], establishing a substantial, legitimate reason for the program [Equal Protection],vi and providing evidence that out-of-state workers or nonresidents are the cause of a discrete, identifiable problem that the local hire preference is directed at remedying [Privileges and Immunities] (Toomer v. Witsell, 334 U.S. 385, 396–98 (1948)).vii Finally, governmental agencies implementing project labor agreements or adopting local hire policies should be aware of issues arising out of the National Labor Relations Act (NLRA) (29 U.S.C. Section 151, et. seq). The NLRA governs labor organizing and the relationship between unions and employers. It forbids state regulation of activities that the Act protects or prohibits, or that Congress intended to be left unregulated to facilitate the “free play of economic forces” (Emp’rs Ass’n v. United Steelworkers, 32 F.3d 1297, 1301 (8th Cir. 1994)). As a federal law, the NLRA also supersedes any local law that contradicts it. Local hiring prefer- ences may run afoul of the NLRA if they are deemed to regulate labor relations or interfere with the free market of construction (Bldg. & Constr. Trades Council v. Associated Builders & Contractors (Boston Harbor), 507 U.S. 218, 227 (1993)). However, such preemption only occurs when the local government is found to be acting in a regulatory capacity. Thus, a public entity can require compliance with a local hiring preference if it (1) advances or serves a state’s proprietary interest in a project, and (2) is “specifically tailored” to the proprietary interest (Boston Harbor 1993).

Approaches and Techniques for Understanding the Parameters of Laws and Regulations 15 Airport Approaches and Techniques in Addressing Diversity Policies in Employment Attracting, hiring and retaining a diverse and qualified staff are important to airports but also potentially challenging for them. Airports often compete with companies in other major industries (e.g., construction and technology) for new or skilled talent. Airports have adopted policies, programs, and practices to hire and retain their employees. Airports implement various strategies such as outreach events, apprenticeship programs for entry-level employees seeking in-house trade jobs, mentorship programs, internships, and training programs. Metropolitan Washington Airports Authority (MWAA), for example, has developed new programs, including an apprenticeship program, aimed at attracting younger workers and workers from across the region. The apprenticeship program has a wide focus and includes jobs in areas such as main- tenance, facilities, and plumbing, which are not typically associated with working at an airport. Another example is the CityBuild Program created and implemented by the San Francisco Mayor’s Office of Workforce Development in collaboration with San Francisco International Airport (SFO), explained further in Chapter 5. Airports are also committed to ensuring nondiscrimination in the employment of onsite airport workers by airport contractors and concessionaires. Airports have developed and deployed contractual tools that help diversify the workforces of their contractors and conces- sionaires (e.g., local hire programs, project labor agreements, worker retention programs, and apprenticeship and internship programs). Los Angeles International Airport (LAX) has created a “Hire LAX” workforce development system which leverages resources from other public agen- cies and community-based organizations. Out of this program an apprenticeship readiness program was also created. A smaller airport, Fresno Yosemite International Airport (FAT), is embarking on $115 million airport expansion project which will be done under a labor agree- ment targeting local workers and contractors, particularly small and diverse businesses, veterans, and women. An emerging trend in the workforce development field is public agency’s use of workforce disparity studies. Like such studies in the contracting field, a workforce disparity study can be an effective tool to ensure nondiscrimination and inclusivity of diverse employees in the internal workforce development programs of the agency and the agency’s construction-related contracts. Workforce disparity studies follow a methodology similar to that utilized in contracting disparity studies, such as examining owner or contractor employee hiring practices, ascertaining rele- vant market areas, using census and other data to ascertain availability and demographic profile of employees in the relevant labor pools, studying market conditions impacting access to available jobs, and conducting statistical disparity analyses. Notes i. Grant recipients may be exempt from the DBE Program if they reasonably anticipate that the total sum of the prime contracts related to airport planning and development they award for the federal fiscal year will not exceed $250,000. ii. Pursuant to 49 CFR Part 18 (Part 18): grant recipients may not use “statutorily or administratively imposed in-State or local geographical preferences in the evaluation of bids or proposals, except in those cases where applicable Federal statutes expressly mandate or encourage geographic preference” (49 CFR Section 18.36(c)(2); 49 CFR Section 23.79). Certain services, such as architectural and engineering services, are exempted from this general prohibition on local preferences (Section 18.36(c)(2)). iii. See 49 U.S.C. Section 47107(e)(5)(a)–(b). The Airport and Airway Improvement Act does not preempt “a State or local law, regulation, or policy enacted by the governing body of an airport owner or operator . . . or the authority of a State or local government or airport owner or operator to adopt or enforce a law, regula- tion, or policy related to disadvantaged business enterprises.” See also, 49 CFR Part 23, Section 23.77: “nothing

16 Guidance for Diversity in Airport Business Contracting and Workforce Programs in this part preempts any State or local law, regulation, or policy enacted by the governing body of a recipient, or the authority of any State or local government or recipient to adopt or enforce any law, regulation, or policy relating to ACDBEs.” (See also 70 Fed. Reg. 14496, 14507 (Mar. 5, 2005)). iv. See, e.g., Associates Builders & Contractors, Inc. v. City of Rochester, 67 N.Y.2d 854 (1986) (without statutory authorization, public agencies are not at liberty to prefer the low bids of resident contractors merely because of their local residency); Koester Contracting v. Bd. of Comm’rs of Warrick County, 619 N.E.2d 587 (Ind. Ct. App. 1st Dist. 1993) (lack of statutory authorization for recognizing a preference resulted in invalidation of a road paving contract awarded by a county board to a resident contractor whose bid was 3 percent higher than the low bidder. Although the county board reasoned that the resident contractor should receive the contract because it employed county residents and paid county taxes, the court ruled that the contract award was illegal because the competitive bidding statute granted no preferences and required the award to be made simply to the lowest responsible and responsive bidder). v. Airports and their legal counsel need to be mindful of the fact that the Sixth Circuit and the Georgia Supreme Court have subjected gender-based affirmative action programs to strict scrutiny. In the Sixth Circuit: Brunet v. City of Columbus, 1 F.3d 390, 403-04 (6th Cir. 1993); Vogel v. City of Cincinnati, 959 F.2d 594 (6th Cir. 1992); Long v. City of Saginaw, 911 F.2d 1192 (6th Cir. 1990); Conlin v. Blanchard, 890 F.2d 811 (6th Cir. 1989). In the Georgia Supreme Court: American Subcontractors Ass’n v. City of Atlanta, 376 S.E.2d 662, 664 (Ga. 1989) (applying strict scrutiny to program favoring minority- and female-owned enterprises in awarding city contracts). vi. A state or local government may make residency a condition of direct employment by the state or local municipality without violating the Equal Protection Clause so long as the challenged local hire program bears a reasonable relationship to a legitimate state interest, such as encouraging local industry or enhancing the local tax base. McCarthy v. Philadelphia Civil Comm’n, 424 U.S. 645, 646–47 (1976) (upholding resi- dency requirement for firefighters under Equal Protection Clause); Detroit Police Officers Ass’n v. Detroit, 385 Mich. 519, 522–23, 190 N.W.2d 97, 98 (1971) (residency requirement for police officers upheld under Equal Protection Clause). vii. To survive a Privileges and Immunities Clause challenge, governmental entities must establish that non- residents are a “peculiar source of the evil” that the local hire preference is aimed at remedying; see also United Bldg. and Const. Trades Council of Camden County and Vicinity v. Mayor and Council of City of Camden, 465 U.S. 208, 222 (1984).

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Many airports are already taking active steps to address and unlock the benefits of a diverse and inclusive workforce. These programs provide benefits to the airport and surrounding communities, but there has not been a comprehensive benefit-cost analysis for diversity contracting programs and their impact on the workforce.

The TRB Airport Cooperative Research Program's ACRP Research Report 217: Guidance for Diversity in Airport Business Contracting and Workforce Programs provides guidelines to assist airport operators and various stakeholders at airports of all types and sizes to identify and quantify the benefits, costs, and regional economic impact of diversity contracting for airport businesses.

As recipients of federal funds, airports are required to administer a federal program that seeks to provide equal access for participation in airport-related business opportunities. Likewise, many airports are also obligated to do so under state and local programs.

The report includes additional materials: an Airport Diversity Contracting Tool and a Tool Users Guide.

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