84ofc20a.htm

DATE: April 25, 1989
CASE NO. 84-OFC-20
IN THE MATTER OF

OFFICE OF FEDERAL CONTRACT 
COMPLIANCE PROGRAMS, UNITED 
STATES DEPARTMENT OF LABOR,

     PLAINTIFF,

      v.

THE UNIVERSITY OF NORTH CAROLINA
(UNC),

     DEFENDANT.

BEFORE: THE SECRETARY OF LABOR

ORDER DENYING STAY


     The Acting Secretary issued a Decision and Final
Administrative Order (Order) in this case on January 23, 1989,
finding that the University of North Carolina is a single agency
with 16 branches or divisions.  The Order held that each of those
divisions is covered by Executive Order No. 11,246, as amended,
Section 503 of the Rehabilitation Act of 1973, as amended, 29
U.S.C. § 793 (1982), and Section 402 of the Vietnam Era
Veterans Readjustment Assistance Act, as amended, 38 U.S.C.
§ 2012 (1982), by virtue of covered government contracts at
some of UNC's divisions, whether or not a particular division
holds government contracts.  The Acting Secretary ordered the
University of North Carolina-Asheville (UNCA), the North Carolina
School of the Arts (NCSA) and all other constituent institutions
of the University of North Carolina to provide Plaintiff access
to their premises, books, records and accounts for purposes of
conducting compliance reviews under the above laws, and to
maintain affirmative action programs as required by those laws
and Department of Labor regulations.  If Defendant did not comply
with the Order within 90 days of the date of the Order, the
Acting Secretary ordered that Defendant's government contracts be
cancelled and that it be debarred from future government
contracts.


[PAGE 2]
     On March 30, 1989, Defendant moved for a stay of the Acting
Secretary's Order pending judicial review.  As grounds for the
stay, Defendant argued that the Acting Secretary's Order was con-
trary to the Tenth Amendment to the United States Constitution,
that it was in excess of the authority of the Department of
Labor, and that it was arbitrary and capricious.  Defendant
further argued that requiring UNCA and NCSA to submit to
compliance reviews is unreasonable because it will require the
expenditure of time, and that cancellation of contracts and
debarment from future contracts would cause irreparable harm to
Defendant and the public, while no harm would be caused by
entering a stay.  Plaintiff opposed the motion for a stay on
grounds which I largely adopt, for the reasons discussed below. 
Defendant filed a Reply Brief to Plaintiff's Opposition.

     Defendant requests the Secretary to issue a stay under
Section 10(d) of the Administrative Procedure Act, 5 U.S.C.
§705 (1982).  That section provides in part that "[w]hen an
agency finds that justice so requires, it may postpone the effec-
tive date of action taken by it, pending judicial review." The
Senate and House reports on the Administrative Procedure Act
explained that "[t]he authority granted [by this section] is
equitable and should be used both by agencies and courts to
prevent irreparable injury or afford parties an adequate judicial
remedy." S. Rep. No. 752, 79th Cong., 1st Sess. (1945), Section
IV, Pike & Fischer, Administrative Law, 2d Series, Desk Book,
Statutes at 37; H. Rep. No. 1980, 79th Cong., 2d Sess. (1946),
Section IV, Pike & Fischer, Statutes at 84.

     The courts have developed a four part test of when they will
order that agency action be stayed, and some agencies have
applied the same standards in deciding whether to stay their own
action. See Virginia Petroleum Jobbers Association v.
Federal Power Commission, 259 F.2d 921 (D.C. Cir. 1958);
In the Matter of Wiscope, S.A., 45 Ad.  L.2d 354
(Commodity Futures Trading Commission, 1979).[1]  The factors the
court set forth in Petroleum Jobbers are:

     (1) Has the [party seeking a stay] made a strong
     showing that it is likely to prevail on the merits of
     its appeal?

     (2) Has the petitioner shown that without such relief, it
     will be irreparably injured. The key word in this
     considerate is irreparable.  Mere injuries,
     however substantial, in terms of money, time and energy
     necessarily expended in the absence of a stay, are not
     enough.


[PAGE 3]
     (3) Would the issuance of a stay substantially harm other
     parties interested in the proceedings?
           
     (4)Where lies the public interest?  In litigation involving
     the administration of regulatory status designed to promote
     the public interest, this factor necessarily becomes
     crucial.  The interests of private litigants must give way
     to the realization of public
     purposes
     .

159 F.2d at 925 (emphasis in original).

     In Wiscope, the Commodity Futures Trading Commission
(CFTC) had ordered the respondent to provide certain information
as required by CFTC's regulations.  The CFTC denied a request
by Wiscope to stay the order pending judicial review
because Wiscope had made no showing of probable success on the
merits, but simply reiterated the unsuccessful arguments it
already had made before the Commission. 45 Ad.L.2d 354, 356, n.3.
The CFTC found that Wiscope had not shown that it would be
irreparably injured if it complied with the Commission's order,
holding that monetary loss is not sufficient, citing Moog
Industries, Inc. v. FTC., 355 U.S. 411 (1958), where the
Supreme Court refused to stay a cease and desist order despite
petitioner's claims of serious financial loss. 45 Ad.L.2d at 357. 
See also Associated Securities Corp. v. S.E.C., 283
F.2d 773 (10th Cir. 1960) (the serious personal injury to
petitioners of being excluded from the securities business and
thus prevented from earning a livelihood was not sufficient to
justify a stay).  On factors 3 and 4, the CFTC held that "[t]he
Commission information gathering function is vital to its ability
to assure the integrity of the marketplace," 45 Ad.L.2d at 356
n.3, and denial of this information would not serve the public
interest.  Id. at 357.

   Here, Defendant has not made a sufficient showing that it is
likely to prevail on the merits. It has asserted that the Actin
Secretary's decision was erroneous on three grounds:  that it is
contrary to the Tenth Amendment, it is in excess of the
authority of the Department of Labor, and it is arbitrary and
capricious.  With respect to Defendant's constitutional argument,
administrative agencies are not competent or authorized to decide
whether status are constitutional.  Oesterich v. Selective
Service Board, 393 U.S. 233 , 242 (1968) (Harlan, J.,
concurring); Public Utilities Commission of California v.
U.S., 355 U.S. 534, 539 (1958); Finnerty v. Cowen, 508
F.2d 979,
982 (2d Cir. 1974).  The Department of Labor is obligated to
consider the laws at issue here as constitutional.
 Defendant argued in its Reply Brief that the Acting Secretary's 
[PAGE 4]
Order exceeded the Department of Labor's authority
because, when Congress amended section 504 of the Rehabilitation
Act (among other laws) to overturn the "program
specific" interpretation of that statute in Grove City College
v. Bell, 465 U.S. 555 (1984)), it made no changes
in section 503.  See Civil Rights Restoration Act of 1987,
Pub. L. No. 100-259, 102 Stat. 28 (1988).  Defendant asserted,
therefore, that the program specific" interpretation of Grove
City "still appl[ies]" to Sections 503,402, and the Executive
Order.  Reply Brief at 6.

  But Grove City never applied to the laws at issue here. 
There is no language in any of them comparable to that in section
504- "under any program or activity receiving Federal financing
assistance"- which was the basis of the Supreme Court's decision
in Grove City.[2]   I find that Defendant has not made the
kind of strong showing of likelihood of success on the merits
that would meet the first test for issuance of a stay.

  Defendant's claims of injury are two types, neither of which
rises to the level of irreparable injury required for a stay.  In
paragraph 8 of its motion, Defendants asserts that both UNCA and
NCSA are very small and requiring them to undergo compliance
reviews will result in an expenditure of time to the detriment of
the faculty and students.  But, as discussed above, courts and
administrative agencies have denied stays where compliance would
cause serious financial hard ships, even deprivation of one's
livelihood.  "Mere injuries, however substantial, in terms of
money, time and energy necessarily expended in the absence of a
stay, are not enough."  Virginia Petroleum Jobbers Association
v. F.P.C., 259 F.2d 921, 925.  The other type of injury
asserted by Defendant, that it could lose $48 million in
contracts, with all the consequences that would entail, is simply
not the type of injury cognizable in considering a motion for a
stay.  The Secretary must assume that, absent a stay, Defendant
will comply with the Acting Secretary's order.  I have already
held that such compliance will not cause Defendant irreparable
injury.[3] 
     
     Finally, as to the third and fourth tests, which are
interrelated, I find that the public interest i administration
and enforcement of these laws far outweighs any inconvenience and
expenditure of time by Defendant.[4] 

     Accordingly, Defendant's motion for a stay of the Decision
and Final Administrative Order issue in this case on January 23,
1989, is DENIED.

     SO ORDERED.



[ENDNOTES]

[1]  I reject Defendant's argument that an agency should not
apply the same standards as a court for issuance of a stay.

[2]  I would note that in a recent decision under Section 503,
the Deputy Assistant Secretary for Employment Standards rejected
a similar argument about implied Congressional restriction of the
scope of coverage of section 503 based on the Civil Rights
Restoration Act and its legislative history.  See OFCCP
v. PPG Industries, Inc., Case No. 86-OFC-9, Final Decision
and Remand Order on Remedy issued January 9, 1989, slip op. at 9-
10.

[3]  The possibility that, if it submits to a compliance review
and is found in noncompliance, Defendant's contracts could then
be cancelled, is far too speculative to constitute irreparable
injury.

[4] It is not unreasonable to assume, although I do not rely on
this point, that there are ample resources available in the
University administration and the larger branches of the
institution which do have contracts and presumably have years of
experience in preparing affirmative action programs and
responding to compliance reviews, to assist UNCA and NCSA.