.   .




                THE       ATTORNEY    GIENEPEAB,
                             OF TEXAS
                           AUSTIN.      TEKAS        78711




                                                June 27.      1974


        The Honorable  Oscar H. Mauzy                           Opinion     No.     H-    337
        Senate Chamber
        Austin, ‘Texas  78711                                   Re: Extent to which State and
                                                                its agencies    are required    to
                                                                enforce   antidiscriminatory
                                                                laws of federal     and state
                                                                governments      in contracting
                                                                with outside entities.


        Dear   Senator   Mauzy:

                  The Senate   Education   Committee        has requested         our    opinion   on the
        following   matter:

                          In view of Executive    Order 11246, the regulations        sent
                          down by the Office ,of Federal      Contract    Compliance     and by
                          the Equal Employment       Commission,       the 1972 Amendments       to
                          the Equal Employment      Opportunity     Act, and other pertinent
                          federal  and state law, under what circumstances            could,
                          should, or must the State of Texas or its agencies            or’pbli-
                          tical subdivisions,   in particular    the Board of Control, and
                          School Districts,   include the following      or a similar     state-
                          ment in its or their requests      for bids, contracts,      purchase
                          orders,   etc. ?

                                  ‘During   the performance     of this contract,
                                   the Contractor    agrees  as follows:     The
                                   Contractor   will not discriminate      against
                                   any employee     because of race,     creed,
                                   color,  sex or national origin. ’

                          It would be greatly  appreciated     if your opinion would
                          encompass   the circumstances      under which such a state-
                          ment would be permissible,       advisable,   or necessary,




                                                p.   1552
The   Honorable    Oscar    H. Mauzy        page       2    (H-337)




                  the particular political            subdivision  affected  in each
                  case, and the precise              nature of the statement    in
                  each case.

         Your question  specifically  encompasses      three separate  issues as it
is phrased to cover the permissibility,      the advisability  and the necessity
of the inclusion of such a contract    clause.   Two of these issues require     little
discussion.

         We know of no law, state or federal,         which would preclude     an agency
from including      a non-discrimination     clause in a contract.   It is therefore
our conclusion      that an agency may include such a clause in its contracts        and
bid specifications.       Whether   use of the clause is advisable   is essentially   a
question   of policy which is outside the statutory       opinion process   of this
office.

         The cases in which       a non-discrimination                clause     must be used depend
on relevant  federal law.

          Executive    Order 11246 of September          24, 1965, is a statement      by the
President     concerning    federal     procurement     and financial    assistance   policy.
The Order requires        all federal     agencies   to condition    the award of federal
contracts    and federally     assisted    construction    contracts    upon the inclusion    of
an equal employment         opportunity     clause of the type you describe.        The clause
is enforced     by the Secretary      .of Labor through the Office of Federal         Contract
Compliance.       The Secretary       of Labor has promulgated         rules which explain
the Executive     Order    in great   detail.        See,   41 C. F. R.        Chapter   60.

          Generally    the Order will only concern the State of Texas,           its agencies,
or political   subdivisions     when application     is made for federal    assistance    to a
state construction      contract  which exceeds       $10,000.   41 C. F.R.   Sec. 60-l. 5.
As an applicant     for federal   assistance,     the State must agree to include the
clause in the construction       contract,    bid or purchase    order which is financed
in whole or in part with federal        funds.    The Executive    Order does not require
the State to include such a clause in contracts,            bids or purchase    orders   that
are financed wholly from state funds.




                                                p.   1553
The   Honorable   Oscar    H. Mauzy       page    3     (H-337)




         The authority   of the President    to condition    federal  assistance   to
state construction    contracts   upon inclusion   of the clause has been considered
and upheld in Contractors       Association   of Eastern   Pennsylvania      v. Secretary
of Labor,   442 F. 2d 159 (3rd Cir. 1971), cert.        denied,    404 U. S. 854 (1971).
The court reasoned:

                  When the Congress         authorizes      an appropriation     for
                  a program     of federal    assistance,       and authorizes    the
                  Executive    branch to implement           the program     by arranging
                  for assistance      to specific    proj.ects,    in the absence    of
                  specific   statutory    regulations      it must be deemed to have
                  granted to the President         a general     authority  to act for
                  the protection     of federal    interests.      (442 F. 2d at 171)

          Consequently,     our opinion is that the State, its agencies       and political
subdivisions    are required       by the Executive  Order,   and regulations    adopted
pursuant thereto,     to include an equal employment        opportunity    clause in those
state construction      contracts,     bids or purchase  orders,  which are federally
assisted   and which exceed $10,000.

         Additional   responsibilities   in the field of non-discrimination      in
employment      are imposed    by the Equal Employment      Opportunity     Act of
1972, 42 U.S. C. 5 2000e, which amended in part Title VII of the Civil
Rights Act of 1964, by prohibiting      the states,   their agencies   and political
subdivisions    from engaging in certain unlawful employment          practices.
Section 2000e-2 provides:

         (a) It shall   be an unlawful    employment        practice   for   an employer    --

                   (1) to fail or refuse to hire or to discharge          any
                  individual,     or otherwise    to discriminate      against
                  any individual      with respect    to his compensation,
                  terms,      conditions,   or privileges     or employment,
                  because of such individual’s          race,   color,  religion,
                  sex, or national origin;       . . .




                                           p.    1554
The   Honorable    Oscar   H.   Mauey     page 4       (H-337)




        Section 2000e-2 applies not only to State employment     practices,
but to the practices     of any employer of 15 or more persons in an industry
which affects   interstate    commerce.

          As a result,  many private  employers   with whom the State deals are
already    required  by federal law to prbvide  equal employment  opportunity.

          However,   Title VII does not require   the State to enforce    its guarantee
of equal employment       opportunity through its contracts    with private   employers,
nor does Title VII prohibit any employer,       including   the State, from having
business    dealings with other employers    who engage in unlawful employment
practices.

          Instead the usual remedy for violation          of Title VII is by filing of
complaint     with the Equal Employment          Opportunity     Commission.       The
Commission,       if it finds reasonable     cause to believe      a violation  has occurred,
will endeavor     through informal      negotiations    to settle the complaint      through a
voluntary    conciliation    agreement.     If necessary,      the Commission       may file a
civil action enjoining      violation  of the Act by the employer,          and seek other
remedies     which are appropriate.        See 42 U.S. C. Sec. 2000e-5.

          The statutory   scheme demonstrates          that the State is responsible      for
assuring    equal employment      opportunities     in state employment.      Each political
subdivision,    as an employer,      is responsible      for its own employment      practices.
Private    employers,    absent general      state legislation,   are not answerable       to the
State for their employment        practices,     but only to the Commission,      initially,
and afterwards     to the courts.

         It is not an unlawful employment          practice  for the State to refuse to
include an equal employment       opportunity       clause in contracts   which it has
with private   employers.     Each employer         under Title VII is responsible
only for its own employment       practices,       not for the practices   of others.

         The possibility  remains   that the State or a political   subdivision   may
enter into a conciliation   agreement   with’:the Commission      which by its terms
requires   the State or a political  subdivision  to include a non-discrimination




                                           p.   1555
The   Honorable    Oscar    H. Mauzy       page    5     (H-337)




clause in all contracts,       bids or purchase   orders.           If such an obligation
exists, it is by virtue      of the voluntary agreement            and not due to any
express  requirements        of Title VII.

          Therefore,    our opinion is that the State is not required    by the Equal
Employment       Opportunity  Act to include a non-discrimination     clause in its
contracts,    bids or purchase     orders.

        Finally,     Title VI of the Civil Rights Act of 1964, 42 U.S. C.    Sec.
2000d, directs     federal  departments    and agencies to enforce the general
requirement     that:

                   No person in the United States shall,          on the ground
                   of race,    color,    or national origin,   be excluded from
                   participation      in, be denied the benefits    of, or be
                   subjected     to discriminationmder       any program    or
                   activity   receiving     Federal  financial  assistance.  .

          It is incumbent     upon federal      agencies    to insure that recipients      of
federal    assistance    administer     program      benefits   on a non-discriminatory
basis.     If necessary,     a recipient     must be directed       to take affirmative
action to correct      discrimination      in federally     assisted    programs.      However,
42 U.S. C. Sec. 2000d-3 clearly            limits   the authority     of a federal   agency
under Title VI to influence         the employment       practices     of a recipient.    It
provides:

                   Nothing contained      in this subchapter    shall be construed
                   to authorize   action . . . by any department         or agency
                   with respect    to any employment      practice   of any employer,
                   employment     agency,     or labor organization     except where
                   a primary    objective    of the Federal  financial    assistance
                   is to provide    employment.

         Federal   regulations   interpreting  Title VI now prohibit   employment
discrimination    where either the primary      purpose of a grant is to provide
employment     or vihere ~dSscriminabjiy.empl~yme~.      practices   tend to result               in
unequal treatment     of persons    who are, or should be, benefiting    from the




                                            p.    1556
The   Honorable     Oscar   Mauzy      page    6     ( H - 337)




grant-aided  activity.      See, for example,         45 C. F. R. Section 80.3 (HEW
Title VI regulations);      49 C. F. R. Section       21. 5 (c) (Dept. of Transportation
Title VI regulations).

        Conceivably,   a federal    agency may under some circumstances
require  the State, as applicant     or recipient of federal  assistance,   to include
an equal employment     opportunity    clause in State contracts,    bids or purchase
orders  which are financed in part with federal       funds.

          For instance,       regulations      by HEW define “program”             for purpose of
Title VI to include an activity           which provides      benefits    to the public “through
employees       of the recipient      of Federal    financial    assistance     or provided      by
others through contracts           or other arrangements           with the recipient”        45
C. F. R. Section 80.13 (9).            If a contractor    under a contract       with the State
is a participant       in a federally     assisted    program,      and if “discrimination
on the ground of race,          color,    [sex] or national origin in the employment
practices      of the recipient     or other persons        subject to the regulations         tends
* . . to exclude individuals           from participation       in, to deny them the benefits
of, or to subject them to discrimination                under any program         . . . ” (45 C. F. R.
Sec. 80. 3 (c) (3)) then the State, an agency,               or a political     subdivision     may
be required       by Title VI to include an equal employment                opportunity     clause
in t:ho:s’e .federally      assisted     contracts,    bids or purchase       orders.      Otherwise
Title VI does not require          the clause in a State contract,           bid or purchase
order.      It is impossible,      given the variety       of federal    grant-in-aid     program
objectives,      to answer your question           more specifically       under Title VI.       See
also,   N.A.A.      C. P.,   Western      Region v. Brennan,          360 F. Supp. 1006 (D. C.
1973).

                                            SUMMARY

                       States,   state agencies,    and political      subdivisions
                   are required    by federal   law to include an equal employ-
                   ment opportunity     clause in federally-assisted          construc-
                   tion contracts    which exceed $10,000.         Title VI may
                   require   a similar   clause in contracts      financed     in part




                                              p.   1557
.   .




        The   Honorable   Oscar   H. Mauzy      page   7    (H-337)




                          by federal    grant-in-aid   funds, but the Equal
                          Employment       Opportunity   Act with 1972
                          amendments,       does not, nor does any other
                          State or fede~ral law, require     the clause to be
                          included in all State contracts,      bids or purchase
                          orders,    though in our opinion such a clause is
                          always permissible.

                                                              Very    truly   yours,




        APPR$?.jVED:




        DAVID M. KENDALL,          Chairman
        Opinion Committee




                                                p.   1558
