Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, this amendment that I am offering on behalf of Senator Kerrey from Nebraska adds another goal to the intelligent transportation system's research program in the underlying bill. It would add the achievement of national transportation safety goals, including at-grade railway-highway crossings to the ITS, intelligence transportation system program. I think it is a good idea to enhance the ITS program. We all know the problems of rail crossings. There are a lot of accidents and deaths, regrettably, at railway-highway crossings. This added language will help in the development of the ITS to try to find ways to minimize these types of things. I urge that we agree to this amendment.

Mr. BAUCUS. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that John Hemphill and Michael Ling, fellows on the Environment and Public Works Committee, be given the privilege of the floor during debate on S. 1173.

Mr. BAUCUS. I move to lay that motion on the table. The motion to lay on the table was agreed to. Privilege of the Floor

Mr. BAUCUS. Mr. President, we reviewed the amendment, and we think it is a good idea. I also ask unanimous consent that Senator Levin be added as a cosponsor.

Mr. BAUCUS. We accept the amendment. I think it is important to clarify that, as a result of this, there is no new money for Michigan but that Michigan will be able to use its own money, particularly its NHS funds, for this access road, basically, to the bridge. With that understanding, we accept the amendment.

Mr. BAUCUS. Reserving the right to object, Mr. President, I might say to my good friend from Alaska, my State of Montana has the same problem Alaska has, being a thinly populated State. We have very much experienced a lot of these same problems with border crossings and what not. One of the issues the Senator mentioned was the border crossings, and maybe there is a way we can work that out in this bill. The mass transit provisions, though--the ferries, for example--are not within this committee's jurisdiction. That is within the Banking Committee's jurisdiction. We expect to have an amendment soon. The Senator makes a basic, good point. It is similar to one I have made many times. I appreciate his coming to the floor.

Mr. BAUCUS. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. BAUCUS. We have also reviewed the amendments and find them acceptable.

Mr. BAUCUS. I move to lay that motion on the table. The motion to lay on the table was agreed to.

Mr. BAUCUS. We have reviewed it. It is fine on our side. THE PRESIDING OFFICER. If there be no further debate, the question is on agreeing to the amendment.

Mr. BAUCUS. Mr. President, parliamentary procedure, please. Where are we?

Mr. BAUCUS. Mr. President, I think there is a unanimous consent request pending.

Mr. BAUCUS. I move to lay that motion on the table. The motion to lay on the table was agreed to. Privilege of the Floor

Mr. BAUCUS. Mr. President, I apologize. I neglected to mention the hard work of the Senator from Florida. He spoke earlier. I know both he and Senator Wyden from Oregon worked very hard on this, as did Senator Smith, who is not on the floor with us. But the three of them worked together to put this together. I might say it is another example of the cooperation and compromise. Often Senators stand up on the floor, and, I might say, speak rhetorically, knowing that they are not going to get the results but trying to score points back home. These are Senators that worked together to accomplish something solid. And it is worthwhile. I compliment the three of them for being cooperative in compromising and getting the work done.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, will the Senator yield for a point of clarification?

Mr. BAUCUS. I have another commitment that starts in about 5 minutes, so if I could speak now that would help this Senator.

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 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. 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. 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.

Mr. BAUCUS. Mr. President, I yield 5 minutes to the distinguished Senator from Minnesota.

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 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.

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.

Mr. BAUCUS. Mr. President, I yield 20 minutes to the very distinguished Senator from Illinois, Ms. Moseley-Braun.

Mr. BAUCUS. I yield 10 minutes to the distinguished Senator from Virginia.

Mr. BAUCUS

Mr. BAUCUS. The Senator is correct. It seems to be fine.