Caseflicks

Supreme Court of the United States • 1983

White v. Massachusetts Council of Construction Employers, Inc.

460 U.S. 204 | 103 S. Ct. 1042 | 75 L. Ed. 2d 1 | 1983 U.S. LEXIS 19 | 51 U.S.L.W. 4211

Full access

Unlock the video and quiz

The written brief is free to read below. Subscribe to watch the video explainer and take the quiz.

Create an account Log in

Takeaway

In short, this case holds that a city may favor its own residents in the workforce for construction it funds itself as a market participant, and may do so on federally funded projects when Congress has affirmatively authorized the preference.

Background

Boston’s mayor issued an executive order requiring that at least 50% of worker-hours on construction projects funded wholly or partly by city-administered money be performed by bona fide Boston residents. The order also contained minority and female participation requirements, but only the residency preference was challenged.

The stipulated record showed that the order covered city-funded public projects and projects supported by certain federal grant programs, including Urban Development Action Grants, Community Development Block Grants, and Economic Development Administration Grants. It did not establish that the order had actually been applied to privately financed projects receiving some city money.

The Massachusetts Supreme Judicial Court held the order unconstitutional under the dormant Commerce Clause. It reasoned that Boston was not acting merely as a market participant because the preference significantly burdened out-of-state construction firms and workers, swept more broadly than necessary, and reached projects involving federal funds. The Supreme Court granted certiorari and reversed.

Issues

Issue #1

Whether Boston’s 50% resident-hiring requirement violated the dormant Commerce Clause when applied to construction projects funded entirely with city money.

Holding

No. When Boston spent its own money on public construction contracts, it acted as a market participant and could favor Boston residents without violating the dormant Commerce Clause.

Reasoning

The Court reaffirmed the market-participant doctrine of Hughes v. Alexandria Scrap Corp. and Reeves, Inc. v. Stake. The dormant Commerce Clause principally restrains state taxes and regulations that burden private interstate trade; it does not ordinarily prevent a state or locality from acting as a buyer or seller in the market and favoring its own residents.

Boston was participating directly in the construction market when it financed public projects with city funds and attached a resident-workforce condition to its contracts. The relevant inquiry was whether the city directly participated in the market, not whether the policy had a substantial effect on out-of-state firms or workers.

The state court’s concerns about the order’s practical burden on interstate commerce and its breadth would matter if Boston were regulating the market. They did not determine whether Boston was instead acting proprietarily. Once Boston qualified as a market participant, the Commerce Clause did not require an independent justification for the local preference.

The Court acknowledged that a government cannot necessarily use its contracts to impose restrictions reaching far beyond the parties with which it deals. But this order covered a discrete and identifiable class of construction activity in which Boston was a major participant. Those working on the covered projects were, in a substantial practical sense, working for the city, so the order remained within the market-participant doctrine.

The Court confined its decision to the record. Although the order’s language could reach projects financed partly with private money, the parties had supplied no evidence that such mixed private-city projects had actually been subjected to the order.

Issue #2

Whether the residency requirement violated the dormant Commerce Clause when applied to construction projects financed in part through the relevant federal grant programs.

Holding

No. Congress and the governing federal regulations affirmatively authorized local employment preferences of this kind in the federal programs at issue.

Reasoning

Congress may authorize state or local conduct that otherwise would offend the dormant Commerce Clause, because the Commerce Clause grants power to Congress rather than limits Congress’s own spending authority. Thus, a local preference specifically sanctioned by Congress presents no dormant Commerce Clause problem.

The federal programs involved were designed to promote economic revitalization and improve opportunities for poor, minority, and unemployed persons. Their implementing regulations required or permitted preferences for local residents and local businesses in training, employment, and contracting connected to federally assisted projects.

Boston’s resident-hiring order was consistent with those federal objectives and regulations. Accordingly, as applied to projects funded in part through the identified federal programs, the order was affirmatively authorized rather than constitutionally barred.

Dissents

Justice Blackmun

Reasoning

Justice Blackmun, joined by Justice White, agreed that Congress had authorized the local preference for projects supported by the specified federal grant programs. Congress may permit state or local discrimination against interstate commerce that the dormant Commerce Clause otherwise would prohibit.

He disagreed that Boston’s requirement was protected by the market-participant doctrine on wholly city-funded projects. In Hughes and Reeves, the government simply chose the direct recipients of a state subsidy or the direct purchasers of a state-produced good. Boston instead required private contractors to favor city residents in their own employment decisions as a condition of receiving public work.

In his view, the distinction should turn on the constitutional purpose of the doctrine: preserving a government’s freedom to manage its own commercial affairs while protecting free private trade in the national market. A government acts as a regulator, not merely as a proprietor, when it dictates whom private firms may hire or otherwise directs their private economic relationships.

Contractual conditions like Boston’s can also have effects beyond the government-funded transaction. A contractor that depends on a stable or permanent workforce may have to favor local residents across its operations in order to qualify for public work. That practical spillover resembles a conventional local hiring regulation and can restrict nonresidents’ access to private employment.

Justice Blackmun would have treated the order as a discriminatory, protectionist measure subject to near-per-se invalidity under the dormant Commerce Clause. Its burden on residents outside Boston as well as out-of-state residents did not cure the problem, because local preferences can still erect an economic barrier protecting a local labor market from outside competition.

He concluded that Boston had less discriminatory alternatives for reducing local unemployment, including training and referral programs or performing construction work itself and hiring city residents directly. The order also preferred all Boston residents rather than targeting unemployed or undertrained residents, making it poorly tailored to its asserted purpose. He would therefore have affirmed the state court’s invalidation of the order as applied to city-only projects.