Construction

U.S. Department of Transportation Federal Highway Administration

MEMORANDUM

Previously you were provided an informational copy of Mr. Anthony R. Kane's memorandum dated July 15, 1994, to Acting Regional Administrator Leon J. Witman, Jr., relative to a Region 10 request for a legal interpretation regarding Indian employment preference. Specifically, the Region had asked for a formal opinion regarding FHWA Notice N 4720.7 with respect to its reference to "other Indian lands." Mr. Kane's response included a legal opinion dated July 12, from Chief Counsel Theodore A. McConnell, which addressed the subject issue as it relates to the State of Alaska.

More recently, another request has been received for guidance regarding the scope and applicability of the Indian employment preference provision of 23 U.S.C. §140(d). On August 31, Chief Counsel Theodore A. McConnell responded to this inquiry which had been made by Mr. Peter B. Shawhan, Assistant Counsel, New York Department of Transportation. Mr. McConnell's response addresses three specific questions raised by Mr. Shawhan and provides some additional "background" information which may be of interest. A copy of Mr. McConnell's August 31 response is attached.

If you have any questions regarding this matter, please contact either Mr. David R. Geiger at (202) 366-0355 or Ms. Vivian A. Philbin at (202) 366-1393.

/s/ Stanley Gordon for William A. Weseman

Attachment

U.S. Department of Transportation
Federal Highway Administration
400 Seventh St., S.W.
Washington, D.C. 20590

In Reply, Refer to: HCC-32

August 31, 1994

Mr. Peter B. Shawhan
Assistant Counsel
Office of Legal Affairs
State of New York Department of Transportation
Albany, New York 12232

Re: 23 U.S.C. § 140(d) Indian Employment Preference

Dear Mr. Shawhan:

This is in response to your April 6 letter to Assistant Regional Counsel Kenneth Dymond. You requested that the Federal Highway Administration (FHWA) provide you with more formal and detailed guidance concerning the scope and applicability of 23 U.S.C . § 140(d) with regard to Federal-aid projects involving facilities and structures on Indian reservations. Your letter enclosed a copy of FHWA Notice N4720.7 dated March 15, 1993, entitled "Indian Preference in Employment on Federal-aid Highway Projects on and near Indian Reservations."

You stated that the New York State Department of Transportation (NYSDOT) is currently negotiating with the Seneca Nation of Indians regarding the applicability of the Seneca Nation's Tribal Employment Rights Law (TERO) to certain NYSDOT contracts. With respect to both the statute and the FHWA Notice, you asked a number of questions. This letter addresses each of your questions, with a combined "background" to questions which are related.

I. Question: To which projects does the Indian employment preference contained in 23 U.S.C. § 140(d) apply? Is the Indian employment preference permissive or mandatory?

Answer: The Indian employment preference applies to all Federal-aid projects on or near Indian reservations. It is discretionary. A State may implement the preference on applicable Federal-aid contracts but is not required to do so.

BACKGROUND

Title 23 U.S.C. § 140(d) provides:

Indian employment and contracting:-Consistent with section 703(i) of the Civil Rights Act of 1964 (42 U.S.C. 2000e-2(i)), nothing in this section shall preclude the preferential employment of Indians living on or near a reservation on projects and contracts on Indian reservation roads. States may implement a preference for employment of Indians on projects carried out under this title near Indian reservations. The Secretary shall cooperate with Indian tribal governments and the States to implement this subsection. [Emphasis added, bold refers to language added in 1991 amendment.]

The legislative history is helpful. Title 23 U.S.C. § 140 was amended in 1987 by section 122 of the Surface Transportation Reauthorization and Uniform Relocation Assistance Act [STURRA]¹. The purpose of the 1987 amendment (as set forth above, less the bold portion) was to conform the antidiscrimination provisions of section 140 with Title VII of the 1964 Civil Rights Act on the issue of Indian preference in employment and contracting for certain Federal-aid highway projects.²

Prior to the 1987 amendment, the FHWA had interpreted 23 U.S.C. § 140 as precluding Indian employment preference on any Federal-aid project. This reasoning was based on an analysis of the competitive bidding and nondiscrimination requirements of Title 23. The FHWA at that time determined that 23 U.S.C. § 140 precluded the application of section 703(i) of the Civil Rights Act of 1964³ to other than Indian Reservation Road [IRR] projects funded under the IRR program pursuant to 23 U.S.C. § 204.

Relevant comments of the Senate Committee on Environment and Public Works, pertaining to the 1987 amendment, are as follows:

Section 127 brings the antidiscrimination provisions of section 140 of title 23, United States Code, into conformity with Title VII of 1964 Civil Rights Act on the issue of Indian preference. Section 703(i) of Title VII makes Indian preference a permissible exception to the general prohibition against discrimination, thereby encoding a longstanding Federal policy towards Indians. During implementation of the STAA of 1982, questions have arisen as to whether the section 703(i) Indian exception is implicit in other antidiscrimination provisions, such as section 140. While the court cases support the principle including 703(i) ... , the bill, to eliminate any doubt on this question, amends section 140 by incorporating 703(i). This subsection shall apply to Indian reservation roads as defined by section 101 of title 23.⁴

As stated in the legislative history, the intent of the 1987 STURRA amendment was to conform 23 U.S.C. § 140 with 42 U.S.C. § 2000e-2(i) [Section 703(i) of the Civil.Rights Act of 1964] which allowed private businesses or enterprises on or near reservations to grant employment preference to Indians living on or near reservations. After 1987, it was clear that Federal-aid contractors could, on IRR projects, grant an employment preference to Indians living on or near a reservation.

The STURRA amendment only applied an employment preference for Indians living on or near a reservation and only for Federal-aid IRR projects. This is in contrast to the 1991 amendment, discussed later. However, in 1987, the FHWA issued a memorandum which extended the employment preference to Indians living not only on reservations, but also living in areas defined under the IRR definition of 23 U.S.C. § 101. That definition, as set forth at 23 U.S.C. § 101 states:

The term 'Indian reservation road' means public roads that are located within or provide access to Indian reservation or Indian trust land or restricted Indian land which is not subject to fee title alienation without the approval of the Federal government, or Indian and Alaska Native villages, groups, or communities in which Indians and Alaskan Natives reside, whom the Secretary of the Interior has determined are eligible for services generally available to Indians under Federal laws specifically applicable to Indians.

Since the purpose of the 1987 amendment was to allow an employment preference for all Federal-aid IRR projects, it makes sense to have this preference apply not just to Indians "living on or near reservations" but also living where the IRRs would be constructed. That is, Indians "residing" within the Indian reservation road definition of:

Indian trust land or restricted Indian land which is not subject to fee title alienation without the approval of the Federal government, or Indian and Alaska Native villages, groups, or communities in which Indians and Alaskan Natives reside, whom the Secretary of Interior has determined are eligible for services generally available to Indians under Federal laws specifically applicable to Indians.

This approach may be one intent behind the 1991 amendment.

The 1991 Amendment

Title 23 U.S.C. § 140(d) was further amended in 1991. Section 1026(c) of the Intermodal Surface Transportation Efficiency Act of 1991 [ISTEA],⁵ addressed the issue of Indian employment preference and added a new sentence to section 140{d):

States may implement a preference for employment of Indians on projects carried out under this title near Indian reservations.

With respect to ISTEA section 1026(c), the legislative history indicates the following:

Subsection (b) amends section 140{d) to authorize states to extend Indian employment preference programs to projects near reservations. Currently, such programs are limited to Indians living on or near reservations and to projects on IRR.⁶

While the specific reference to reservations is contained in floor remarks made by Rep. Miller (D-CA) regarding section 126 of H.R. 2950 (the House version of the surface transportation reauthorization bill), the congressional intent of increased Indian employment is also expressed:

... this bill extends Indian employment preferences so that more Indian labor will be used when building on or near reservations.⁷

It is clear that the ISTEA amendment made two separate changes with respect to Indian employment preference. First, it permits an employment preference with respect to all Indians, not just Indians living on or near a reservation. Second, the employment preference applies to all Federal-aid projects near reservations, not just Federal-aid IRR projects. The amendment also reiterates a State's authority to implement Indian employment preference provisions on Federal-aid projects near reservations. Although the 1987 STURRA amendment expressly permits a State to include Indian employment preference in its Federal-aid contracts, the 1991 ISTEA amendment clarifies the issue by the language, "States may implement." It is important to note that neither the STURRA nor ISTEA mandate that States utilize the preference in applicable contracts. A State may require the preference but the State is not required to do so. The FHWA policy, however, has been to encourage the States to implement the Indian employment preference in applicable contracts.

II. Question: The statute states that the Indian employment preference may be implemented on projects "near" Indian reservations. FHWA Notice N4720.7 3(a} (1) states: "Roads 'near' an Indian reservation are those within a reasonable commuting distance from the reservation." Is the interpretation of the word "near" subject to State discretion and negotiation?

Answer: Yes.

BACKGROUND

Title 41 C.F.R. § 60-1.5(a) (6) [Office of Federal Contract Compliance Programs] provides:

Work on or near Indian reservations. It shall not be a violation of the equal opportunity clause for a construction or nonconstruction contractor to extend a publicly announced preference in employment to Indians living on or near an Indian reservation in connection with employment opportunities on or near an Indian reservation. The use of the word 'near' would include all that area where a person seeking employment could reasonably be expected to commute to and from in the course of a work day. Contractors or subcontractors extending such a preference shall not, however, discriminate among Indians on the basis of religion, sex, or tribal affiliation, and the use of such a preference shall not excuse a contractor from complying with the other requirements contained in this chapter.

The Equal Employment Opportunity Commission (EEOC) has addressed the above regulation and the word "near" as used in this context. On May 16, 1988 the EEOC issued Notice N-91S-027, "Policy Statement on Indian Preference under Title VII" (attached). This policy statement, signed by then EEOC Chairman (now Justice) Clarence Thomas, was not published in the Federal Register but is contained in the appendix to Volume II of the EEOC Compliance Manual, a manual published by various commercial distributors. It is not "binding" on other Federal agencies but is used as "enforcement guidance" to the field. The policy statement set forth the EEOC's interpretation of the meaning and scope of the Indian preference provision contained in Section 703(i) of Title VII of the Civil Rights Act of 1964, as amended. A number of areas relative to Indian employment preference are discussed, including the meaning of the phrase "on or near an Indian reservation."

In addressing the language contained in the above OFCCP regulation, the EEOC stated:

Upon considering the intent of Section 703(i), the Commission is persuaded that the definition of 'near' in the OFCCP regulations cited above is consistent with and furthers the purpose of the Title VII provision. As noted, this definition appears in the specific context of an Indian preference provision that parallels that in Title VII. Unlike a definition that establishes the outer reach of that term by specifying a fixed distance applicable in all cases, a definition based on what may be considered reasonable commuting distance provides the flexibility necessary to take differing geographic and economic circumstances into account. Thus, since proximity to employment sources varies from one reservation to another and one part of the country to another, such a definition avoids potential inequities and promotes a fair application of the statutory exception.

***

[D]eterminations of whether the "on or near" criterion is met shall be made on a case-by-case basis.⁸

III. Question: Does FHWA view § 140(d) as authorizing Indian preferences only for equal employment opportunity hiring purposes, or also for Minority Business Enterprise subcontractor utilization as well?

Answer: The Indian employment preference program set forth in 23 U.S.C. §140 (d) does not apply to the Disadvantaged Business Enterprise (DBE) program.

BACKGROUND

The Indian employment preference contained in 23 U.S.C. § 140(d) is a hiring preference. It is not a contractor preference. The only contracting preference which can be recognized in a Federal-aid highway contract is that authorized by the DBE provisions.

The DBE program provides that, except to the extent the Secretary determines otherwise, not less than 10 percent of the programs listed in 49 C.F.R. § 23.63 (which includes the Federal-aid highway program) shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals. Native Americans are presumed disadvantaged. The DBE program was initially established pursuant to section 105(f) of the Surface Transportation Assistance Act of 1982⁹. The DBE program was reauthorized in the STURRA¹⁰ and again reauthorized in the ISTEA.¹¹

I hope the above is of assistance to you. Please contact Vivian Philbin of my staff at (202) 366-1393 should you have any additional questions.

Sincerely yours,
/s/ Theodore A. McConnell
Chief Counsel

1. Pub. L. No. 100-17, 101 Stat. 132 (Apr. 2, 1987).
2. H. Conf. Rep. 27, 100th Cong., 1st Sess. 149, 164 (1987) [the conference substitute adopted the Senate amendment [section 127], there was no similar provision in the House bill].
3. Codified at 42 U.S.C. § 2000e-2(i).
4. S. Rep. No. 4 100th Cong., 1st Sess. 18 (1987).
5. Pub. L. No. 102-240, 105 Stat. 1914 (Dec. 18, 1991)
6. H.R. Rep. No. 171, Pt. 1, 102d Cong., 1st Sess. 83 (1991) Similar language contained in H.R. Conf. Rep. No. 404, 102d Cong., 1st Sess. 324 (1991).
7. 137 Cong. Rec. E-3566 (Oct. 28, 1991).
8. EEOC Notice N-915.027 dated 5/16/88 at page 8.
9. Pub. L. No. 97-424, 96 Stat. 2097 (Jan. 6, 1983).
10. §106(c) of Pub. L. No. 100-17. 101 Stat. 132 (Apr. 2, 1987).
11. §1003(b) of Pub. L. No. 102-240, 105 Stat. 1914 (Dec. 18, 1991).

EEOC Notice 915.027