CCASE_NAME:
US DOL V. NT'NL BANK OF COMMERCE OF SAN ANTONIO
CCASE_NO:
77-OFCCP-2
DDATE:
19780503
TTITLE:
RECOMMENDED DECISION AND ORDER
TTEXT:
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In the Matter of
UNITED STATES DEPARTMENT OF THE
TREASURY
Plaintiff,
Case No. 77-OFCCP-2
v.
NATIONAL BANK OF COMMERCE OF SAN
ANTONIO
Defendant
DAVID H. ROSENBAUM, ESQ.
Department of the Treasury
Room 1405, Main Treasury Building
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220
GARY M. BUFF, ESQ.
U.S. Department of Labor
200 Constitution Avenue, N.W.
Washington, D.C. 20210
For the Plaintiff
TERRY S. BICKERTON, ESQ.
Cox, Smith, Smith, Hale & Guenther
500 National Bank of Commerce Building
San Antonio, Texas 78205
For the Defendant
Before: SALVATORE J. ARRIGO
Administrative Law Judge
RECOMMENDED DECISION AND ORDER
Statement of the Case
This is a proceeding instituted under the provisions of
Executive Order 11246, as amended by Executive Order 11375
3 CFR 339 et. seq. (hereinafter called the Order) and the
regulations issued thereunder, 41 CFR Chapter 60 et. seq.
(hereinafter called the Regulations).
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On May 25, 1977 the United States Department of the
Treasury (the Plaintiff or Treasury herein) issued a complain
alleging that the National Bank of Commerce of San Antonio
(the Defendant or the Bank herein) failed to comply with
certain equal employment opportunity provisions of the Order
and the Regulations. Defendant, on August 15, 1977, filed
its answer to the complaint wherein it admitted certain
allegations, denied others, raised various affirmative
defenses and requested a hearing.
Pursuant to proper notice a prehearing conference was
conducted on January 18, 1978 in San Antonio, Texas at which
the parties were represented by counsel. At the prehearing
conference certain admissions of fact were received and the
parties agreed, inter alia, that except for Defendant's
contentions relative to the validity of the Order and the
Regulations, the matter could be decided without the need of
a hearing. Subsequent to the prehearing conference the
parties executed a document entitled "Stipulations" wherein
additional facts were agreed upon an said stipulations
were forwarded to me and are now a part of this record.
Background
Prior to the filing of the complaint herein Plaintiff,
by letter dated November 15, 1976, notified Defendant that
it concluded Defendant had not demonstrated a reasonable
effort to comply with certain requirements set forth in the
Regulations. Essentially, the Plaintiff's letter indicated
that Treasury found specific deficiencies in the Bank's
written affirmative action program. Defendant was given
thirty days to show cause why enforcement proceedings,
which could result in sanctions, should not be instituted.
Further, technical assistance to remedy the cited deficiencies
was offered. Defendant informed Plaintiff it was concerned
that compliance with the Order might violate title VII of
the Civil Rights Act of 1964 (42 U.S.C. 2000e), 42 U.S.C.
1981, and the Constitution of the United States.
On December 17, 1976 the Bank filed with the United
States District Court for the Western District of Texas an
action for declaratory judgment against the Secretary of the
Treasury and the Secretary of Labor. The Bank asked the
Court to declare that the establishment by the Bank of a
written affirmative action program which complied with 41
CFR 60-2.10 et seq., particularly the provisions which refer
to goals and timetables for the hiring and promotion of
minorities and women, would violate Title VII and/or 42
U.S.C.1981. Further, the Bank contended that the Government's
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Attempt to have established such a affirmative action program
violated the U.S. Constitution "and other applicable laws."
Various court proceedings relative to this action
ensued and subsequently, on August 10, 1977, the Court
entered an Order and Judgment which, inter alia, dissolved a
preliminary injunction which had issued previously. The
Court held, in relevant part:
"This Court is of the opinion that the position
taken by the plaintiff has considerable merit,
and could very well prevail upon a final hearing
especially since no Court has found that plaintiff
has intentionally engaged or is intentionally
engaging in any unlawful employment practice.
Nevertheless, since the Executive Order and the
regulations thereunder do not appear on their
face to be illegal, great care should be exercised
before making a judicial determination
concerning their validity until more information
as to their specific application in the present
case has been obtained. In this connection, the
evidence, legal arguments and agency position
reasonably expected to be developed through
participation of the parties in the administrative
procedures will not doubt be of material
benefit to the Court in arriving at a correct
final decision, and the Plaintiff will be expected
to cooperate by raising the substantial issues of
law and fact involved. Since, under this order,
the administrative procedures are reviewable by
this Court before any sanctions can be enforced,
the plaintiff will suffer no irremediable adverse
consequences in following this course of action.
"In view of the fact that the regulations, which in
themselves constitute final agency action, are
being challenged on Constitutional grounds, it
would be inappropriate for this case to be dismissed.
Therefore, jurisdiction will be retained
pending further orders of the Court."
The question of whether the District Court properly
retained jurisdiction of the action is presently on appeal
before the United States Court of Appeals for the Fifth
Circuit.
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Preliminary Conclusions
As stated above, at the prehearing conference held
before me on January 18, 1978, the parties acknowledged
that, assuming no issue of Constitutionality or validity of
the Order or Regulations was present in this case, no
hearing on the facts giving rise to this matter would be
necessary if the record was supplemented by various stipulations
which have now been received. However, the parties
were uncertain as to whether, pursuant to the District
Court's August 10, 1977 Order Supra, an Administrative
hearing should include evidentiary matters bearing upon the
contentions of Constitutionality and validity.
I do not interpret the District Court in its August 10,
1977 Order, as ordering a hearing on matters going to the legality
of the Order and Regulations. Rather, the District Court in
withholding any immediate decision on the merits of the
matter explicitly referred to obtaining "more information as
to their specific application in the present case." By such
Language, I understand the Court to be inquiring as to
nature of the factual question of how the Order and Regulations
were applied in this case and how an alleged violation
of the Order and Regulation occurred. Thus, the Court's
approach in this regard is consistent with the normal function
of the administrative process, of which the proceeding
before me is a part, to determine the facts which give rise
to a dispute and to adjudicate whether those facts indicate
a violation of the statute, order or regulations involved.
Issues concerning the constitutionality and validity of
statutes, orders and regulations are solely for determination
of the federal courts. The orderly and efficient operation
of Government requires that in these matters, the validity
and constitutionality of underlying statutes, orders and
regulations must be assumed by administrative bodies. It
would be anomolous indeed if an administrative entity could
declare an act of Congress of the President unconstitutional
or illegal and rule invalid the very regulations which bring
it into being or give it authority to act.
Case Law amply supports these conclusions. Thus,
Justice Harlan in his often cited 1 concurring opinion in
Oestereich v. Selective Service System Local Board No. 11,
Cheyenne, Wyoming, et. al., 393 U.S. 233 (1968) stated:
"Adjudication of the constitutionality of congressional enactments
1 e.g. Johnson et al. v. Robison, 415 U.S. 361 (1974).
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has generally been thought beyond the jurisdiction of administrative
agencies." (Footnotes and citations omitted.)
Further expression of this principle is found in numerous
other cases: Downen v. Warner et al., 481 F. 2d 642 (9th Cir.
1973), "Resolving a claim founded soley upon constitutional
right is singularly suited to a judicial forum and clearly
inappropriate to an administrative board"; Finnerty v. Cowen,
508 F. 2d 979 (2nd Cir. 1974), "Federal agencies. . . have
neither the power nor the competence to pass on the constitutionality
of administrative or legislative action"; American
Stevedores, Inc. et al. v. Salzano, et al, 538 F.2d 933 (2nd
Cir. 1976), ". . . the (agency) would not have been the
proper forum in which to adjudicate the constitutionality of
legislation they are charged with administering"; Engineers
Public Service Co, et al. v. Securities and Exchange Commission,
138 F.2d 936 (D.C. Cir. 1943), dismissed as moot 332 U.S.
788, "There has been no decision which holds that an administrative
agency must receive evidence offered to show that
its governing statute is invalid, or which empowers the
reviewing court to direct the agency to take such testimony
or make findings of fact upon it. For the foregoing reasons
we are of the opinion that the action of the (agency) in
excluding the offered testimony must be affirmed . . . we
hold merely that the preferred evidence was not admissible
at the hearing before the (agency). . . ."
Accordingly, the only issue before me for determination
is whether the Defendant's conduct herein conformed to the
Order and Regulations. As to this issue I recommend the
following:
Findings and Conclusions
Based upon the record in this matter, including the
Complaint, Answer, transcript of the prehearing conference
conducted on January 18, 1978 and the parties stipulations
of February 1978 and other post prehearing conference submissions,
I find and conclude as follows:
1. The Bank is a national banking association which
has, at all times pertinent hereto, maintained and continues
to maintain a place of business and employment at 430 Soledad,
San Antonio, Bexar County, Texas, where it has engaged and
continues to engage in the business of commercial banking.
2. The Bank currently has more than 50 employees, and
at all times in the last 10 years it has had more than 50
employees.
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3. At all times pertinent hereto, the Bank has been
and continues to be a financial agent within the definition
at 41 CFR [[ page 6 line 3 SS ]]10-12.803, in that it has:
accepted and continues to accept deposits of public money;
been and continues to be an issuing agent of U.S. Savings
Bonds and U.S. Saving Notes; and been and continues to be a
paying agent of U.S. Saving Bonds and U.S. Savings Notes.
4. At all times pertinent hereto, the Bank has had
and continues to have: contracts of deposit with Treasury
pursuant to 31 CFR Parts 202, 203, and 214; a contract with
Treasury to be an issuing agent of U.S. Savings Bonds and
U.S. Savings Notes pursuant to 31 CFR Part 317; and a
contract with Treasury to be a paying agent of U.S. Savings
Bonds and U.S. Savings Notes pursuant to 31 CFR Part 321.
5. In its application to establish a Treasury Tax and
Loan Account, dated March 27, 1969, the Bank agreed" to be
bound by the provisions of the Equal Employment Opportunity
Clause set forth in Section 202 of Executive Order 11246, as
amended . . . and the regulations issued pursuant thereto (41
CFR Chapters 60 and 10-12.8), in the same manner and to the
same extent as if their provisions were set forth herein...."
The Bank, in accordance with its application and Treasury
regulations, has established and continues to maintain a
Treasury Tax and Loan Account.
6. The Bank has not received any exemption from any
portion of Executive Order 11246, as amended, or the regulations
issued thereunder.
7. The Bank has been and continues to be a Government
contractor within the meaning of Executive Order 11246 and
is subject to all obligations, insofar as they are legal,
imposed on Government contractors by Section 202 of Executive
Order 11246, as amended, and the implementing regulations
issued thereunder.
8. By letter dated July 2, 1976, Treasury advised the
Bank of its plans to conduct a compliance review during
calendar quarter October-December, 1976 and invited the Bank
to send a representative to a Treasury sponsored Affirmative
Action Plan Workshop.
9. By letter dated July 8, 1976, the Bank replied to
Treasury acknowledging the expected on-site visit and accepting
the invitation to attend the Affirmative Action Plan workshop.
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10. By letter dated September 21, 1976, the Bank was
requested to submit, within 30 days, a written Affirmative
Action Program (AAP) and supporting documentation. The
Bank was also advised that the contents of such AAP were to
be in conformity with the requirements of subparts B and C
of 41 CFR Part 60-2.
11. On or about October 20, 1976, the Bank submitted
to Treasury documents entitled "Statement of Policy" and
"Affirmative Action Program" which documents failed to
conform to the requirements of 41 CFR [[ double SS page 7 line
10 ]]60-1.11 through 60-2.13, and the Bank has, at all times
pertinent hereto, continued to fail to submit an AAP which
conforms to the requirements of 41 CFR [[ Page 7 line 13 SS ]]
60-2.11 through 60-2.13.
12. By letter dated November 15, 1976, the Assistant
Secretary (Administration), Department of the Treasury
issued a Show Cause Notice to the Bank which indicated that
the Bank's AAP was deficient in that it failed to contain
the following items of an AAP as required by the regulations:
a. Workforce Analysis - 41 CFR 60-2.11(a)
b. Utilization Analysis - 41 CFR 60. 211(b)
with resulting numerical Employment
Goals and Timetables - 41 CFR 60-2.12
and 2.13(e).
c. Identification of problem areas by organizational
unit and job group - 41 CFR
60-2.12(d).
d. Development and execution of action oriented
programs designed to eliminate problems
and further designed to attain established
goals and objectives - 41 CFR 60-2.13(f).
e. Design and implementation of internal audit
and reporting systems to measure effectiveness
of the total program - 41 CFR 60-2.13(c).
f. Compliance of personnel policies and
practices with the Sex Discrimination Guidelines
(41 CFR 60-20) - 41 CFR 60-2.13(h).
g. Active support of local and national
community action programs and community
service programs designed to improve the
employment opportunities of minorities
and women - 41 CFR 60-2.13(i).
h. Consideration of minorities and women not
currently in the workforce having requisite
skills who can be recruited through
affirmative action measures - CFR 60-2.13(j).
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13. By letter dated November 29, 1976, Treasury offered
the Bank any technical assistance it might require in remedying
the deficiencies set forth in paragraph 12, above.
14. By letter dated December 6, 1976, the Bank through
its attorney, Terry S. Bickerton, questioned Treasury's
authority to require the Bank "To establish goals and timetables
for the preferential hiring and promoting of minorities
and females."
15. On or about December 8, 1976, a Treasury representative,
Kenneth G. Patton, telephone Mr. Bickerton for
the purpose of answering the latter's inquiry dated December
6, 1976 and made efforts to explain that in his opinion
nothing in Executive Order 11246, as amended, or the regulations
issued pursuant thereto, required or permitted preferential
treatment. In order to further clarify Treasury's requirements
and to answer any further questions, Mr Patton arranged
for Charles Cuellar, a Treasury compliance official, to
visit Mr. Bickerton in the latter's law office. That visit
occurred the following afternoon, on or about December 9,
1976.
16. Pursuant to 41 CFR [[ page 8 line 21 SS ]]60-1.20(b) and 41
CFR [[ page 8 line 21 SS ]]60-2.2(c)(2), efforts were made by Treasury
and the Bank to secure through conciliation and persuasion, voluntary
compliance with Executive Order 11246 and the rules, regulations and orders
promulgated thereunder. These efforts were unsuccessful.
17. At all times relevant hereto the Bank has failed
to comply with the provisions of Executive Order 11246,
which are a part of its contracts with Treasury, and the
requirements of 41 CFR Chapter 60, in that the Bank's
affirmative action compliance program fails to contain or
reflect the following information or ingredients:
A. Workforce Analysis, as required by 41 CFR
60-2.11(a).
B. Utilization Analysis, as required by 41
CFR 60-2.11(b) with resulting numerical
employment goals and timetables, as required
by 41 CFR 60-2.12 and 2.13(e).
C. Identification of problems areas by
organizational unit and job groups, as
required by 41 CFR 60-2.13(d).
D. Development and execution of action
oriented programs designed to eliminate
problems and further designed to attain
established goals and objectives, as
required by 41 CFR 60-2.13(f).
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E. Design and implementation of internal
audit and reporting systems to measure
effectiveness of the total program, as
required by 41 CFR 60-2.13(g).
F. Compliance of personnel policies and
practices with the Sex Discrimination
Guidelines (41 CFR 60-20), as required
by 41 CFR 60-2.13(h).
G. Active support of local and national
community action programs and community
service programs designed to improve
the employment opportunities of minorities
and women, as required by 41 CFR 60-2.13
(i).
H. Consideration of minorities and women
not currently in the workforce having
requisite skills who can be recruited
through affirmative action measures, as
required by 41 CFR 60-2.13(j).
18. No good cause, cognizable in these proceedings, has
been shown to exist for Defendant's failure to have and make
available an acceptable Affirmative Action Program which
conforms to the requirements of Executive Order 11246, as
amended, and the implementing Regulations.
19. By virture of the National Bank of Commerce of San
Antonio's failure to have and make available an acceptable
Affirmative Action Program which conforms to Executive Order
11246, as amended, and its implementing Regulations as found
above, and no good cause cognizable in these proceedings
having been shown to exist for such failure, it is recommended
that the appropriate Administrative Order designed to remedy
the violations found herein be issued.
RECOMMENDED ORDER
It is hereby, ORDERED, that all of National Bank of
Commerce of San Antonio's federal and federally-assisted
contracts and subcontracts be cancelled, and that the Bank
and its successors be ineligible to accept deposits of
public money, to act as an issuing and paying agent of U.S.
Savings Bonds and U.S. Savings Notes, be ineligible for the
award of any contract or subcontract funded in whole or in
part with federal funds, and be ineligible for extensions or
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other modifications of any existing government contracts and
subcontracts, until the Bank has satisfied the Secretary of
the Treasury that it is in compliance with the provisions of
Executive Order 11246, and the rules, regulations and orders
issued thereunder.
________________________
SALVATORE J. ARRIGO
Administrative Law Judge
Dated: 3 May 1978
Washington, D.C.
SJA:mjm
