WHITE v. MASS. COUNCIL OF CONSTR. EMPLOYERS

Transcript: 

ORAL ARGUMENT OF LAURENCE H. TRIBE, ESQ., ON BEHALF OF PETITIONER KEVIN H. WHITE, ETC., ET. AL.

Chief Justice Burger: Mr. Tribe, I think you may proceed when you are ready.

Mr. Tribe: Thank you.

Mr. Chief Justice, may it please the Court:

This case is about a Boston executive order which applies to construction work on projects for which the city makes the construction contract and provides public revenues either from taxes that the city itself raises or from funds that the city procures from the Federal Government.

To the extent feasible, at least half the jobs that the city creates on these projects must go to city residents, and the issue is whether the Constitution forbids giving residents this priority.

Let me stress that the question is not whether the city may divert pre-existing private jobs from nonresidents to residents.

The only question is the allocation of publicly subsidized jobs that the city itself generates with its own foresight and industry.

Now, that foresight and industry by a city confronting urban decay and unemployment may take two main forms: First, it may take the form of focusing the city's political energy on raising enough local tax revenues to generate the needed jobs in classical public works projects, like schools and roads; and secondly, it may take the form of focusing political energy on attracting enough federal aid to the city's coffers to induce private firms in accord with the terms of whatever federal grant is obtained to create needed jobs in the construction of housing or other forms of urban renewal.

Boston has done both of these things.

And I should like to begin with the second, with the attraction of federal funds, since I think that is the more innovative and the more controversial.

Urban renewal projects that are made possible by efforts made by the City of Boston to attract the federal aid that such projects need are just as much the product of the city's collective political exertions as are the schools and the streets that the city funds through local taxes.

Indeed, the State Supreme Court, whose judgment is being reviewed here, said both in its opinion and in the judgment of that Court, that all projects covered by the executive order, in its words, are "city-funded construction projects".

That's all the judgment at page A-17.

Unidentified Justice: Mr. Tribe, under that line of reasoning, wouldn't it be possible to say that the decision of the Hilton Corporation to build a new Hilton on Copely Square might be thought to be the result of the city's ingenuity, too?

I suppose city efforts to into that.

Mr. Tribe: Well, in this case, Justice Rehnquist, the key point is that the city is a but-for cause under the very terms of the regulations.

Under 42 U.S. Code section 5318(j), Secretary of HUD must find a strong probability that the whole private development would not occur but for the specific federal funds.

Now, if it could really be shown that in a particular case a mix of public and private funds is the direct result under the terms of the federal statute, the direct result of a city process, a complicated process of holding local hearings and then lobbying for a grant, then our reasoning would apply.

Unidentified Justice: Well, what if it were strictly private funds but the city had been very active in persuading the persons who had the disposition to private funds to use them in Boston rather than Minneapolis?

Mr. Tribe: I suppose that that would push our logic beyond the point where I would urge the Court to take it.

That is, we are not suggesting that any time the city deserves a pat on the head for having something happen that the city can then parcel things out in a partial way.

We are saying that when the federal program itself identifies a special role for cities to solve problems of severe economic distress, and to do so by attracting indispensable federal money, then at least the jobs on that project are indistinguishable from jobs that are funded by municipal bonds or by other things.

Unidentified Justice: Well, why should the city stand any better if it applies its regulation to things that it had no part in funding but was federally funded, but it nevertheless had a great part in producing on the scene, than should the privately funded things that it had the same great part in producing?

Mr. Tribe: Well, I suppose the judgments of degree here are ones that this Court might well leave to Congress.

And Congress has drawn that line; that is, in the relevant statute, the Housing and Urban Development Act, Congress specifically said that with respect to these projects, not only is it indispensable that the city and the developer specify that the project couldn't occur otherwise, but once the project is funded it is a requirement under the statute that to the greatest extent feasible, at least as to the job opportunities that are made available on the project, that those go to residents of the area.

And it seems to me when Congress has made that judgment, there is no reason in the name of the Commerce Clause or any other provision of the Constitution for the Court to worry about remote hypotheticals in which the city might someday make a broader argument.

Here I think what is remarkable about what the City of Boston has done is not that it is in fact reserving to its citizens half the jobs on these public works projects and urban renewal projects, but that notwithstanding the fact that the city plays the indispensable role of generating all these jobs, it is willing to let nonresidents have half of them even though the federal statute and the federal regulations say that to the maximum extent feasible the jobs should go to local residents.

So it seems to me as far as the federally funded portion is concerned, when the city goes and gets the money from the Federal Government by showing that it is needed to resolve problems of severe economic distress, that at that point there is no basis for drawing a constitutional distinction based on where the money came from.

Now, I do want to suggest, though, that any notion that somehow the city is trying to pyramid this power into a broad takeover of the private sector on the rationale that the city has played a key role after all, but for the innovation of the city, the whole private sector might be less well off.

Any such notion should be dispelled.

We are talking here about approximately 11 percent of the construction that is going on in the City of Boston, and we are talking about two kinds of construction: classical, traditional public works construction funded entirely by the city as to which I have yet to see an argument on behalf of the respondents as to why the preference is impermissible; and somewhat more innovative urban development projects that have to be tailored to the needs of the neighborhood.

Unidentified Justice: Does the record really tell us how much of each is involved--

Mr. Tribe: Justice O'Connor, the record is ambiguous.

It... it suggests if you turn to page, I believe it is, A. 42 in the petition for certiorari, the appendix to the petition, we know that $483 million approximately is the total construction, at least in the fairly typical year of 1980.

Of that amount, $54 million was covered by the executive order.

And of that $54 million, $34 million represented projects that in some way or other involved urban development action grants.

Unidentified Justice: --But we don't know how, we don't know if the city was signatory or what.

It seems like a pretty--

Mr. Tribe: Well, we know that the city does not in fact... the city does not in fact sign the construction contract on the hotel and other purely private-seeming parts of the project.

The city signs the construction contract on infrastructural parts, such as those that are paid for by about $4 million of the $18 million Copely Place grant.

But the reason that I press the point to discuss the entire urban development action grant picture is that no ambiguity about the record on that point could possibly justify the judgment that is being reviewed in this Court.

Unidentified Justice: --Did the city make the argument about the federal policy that is being made now in these briefs to the court below?

Mr. Tribe: Well, actually, it was in the Complaint, it was in the Complaint made against the city; that is, the Complaint quoted some of these regulations.

And it has always been puzzling to the city why the plaintiffs in this case would have relied, in part, on federal regulations which seems to us fully vindicate everything the city is doing with respect to the federally funded portion in this case.

And it is for that reason that we have seen this case as principally about city-funded in the traditional limited sense, city-funded public works projects, and the question whether as to those projects it is permissible after this Court's precedents in Hughes and Reeves were the preference.

Unidentified Justice: Do you think your UDAG argument is really fairly representative of the writ for certiorari?

Mr. Tribe: It... in the petition for certiorari, Justice--

Unidentified Justice: No, the question is presented on there on the first page.

Mr. Tribe: --No, that's right.

It was certainly not mentioned in the questions presented, although the questions presented are broad enough to encompass it potentially; that is, tax-supported public works employment, I would think, after this Court's decision in cases like United Transportation Union v. Long Island, ought not to be interpreted in a static historical sense; that is, public works need not take the form of roads and parks and schools, they can take the form in the modern period when the needs of a given decaying urban area require an infusion of outside funds for shopping centers, and it can take that form as well.

And so the same fundamental issue is presented, and indeed in the petition elsewhere we discuss the reason that we did not think it made any difference if some of the funds were federal, on page 20 and 21 of the petition.

But it seems to me that the Court need only reach the question whether public works projects, however precisely defined, funded by city funds, raised in a variety of ways, can be so administered that at least half the work crews on those projects are required to be Bostonians, members... residents of the city... I say "members" having just heard that colloquy about membership... residents of the city to the extent feasible.

Now, when the city uses its public revenues to fund traditional, classical public works... schools, streets, and so on--

Unidentified Justice: Mr. Tribe, before you get to the traditional--

Mr. Tribe: --Sir.

Unidentified Justice: --public works, just pausing with the public federally funded projects for the moment, isn't there a possibility that there's a conflict between some of the federal secretary's regulations and the specific 50 percent requirement of the Boston executive order which might raise the preemption issue, which is one of the questions that, as I understand, the Massachusetts Supreme Court did not answer, and that--

Mr. Tribe: I would think--

Unidentified Justice: --that might remain in the case?

Mr. Tribe: --I would think, Justice Stevens, that it would cut the other way; that is, the other--

Unidentified Justice: For the most part, I can see a parallel between the two.

But isn't it possible that there would be some fringe areas in which the 50 percent requirement might differ from the requirement for low-income persons and things of that character?

Mr. Tribe: --If there were a flat 50 percent requirement without any feasibility test, then it might.

But at page 25, A. 25 of the petition, the documents that are there reproduced specify that if all reasonable steps have been taken to comply with the 50 percent rule, the contractor shall be deemed in compliance.

And the Chief Justice's opinion in Fullilove treated best efforts language of just that kind in the federal public works provision as enough to make it not a quota but a goal.

And indeed, in the Copely Place UDAG, urban development action grant, which is described and relied on heavily by the other side, at page 137 of the grant application it is specified that all the contractor need do is take reasonable measures, every reasonable possible measure, to achieve compliance.

But if the contractor can't do it because insufficient qualified workers are available, he is excused.

So it seems to me clear that if it's administered in a way that is not only parallel but completely convergent... and understandably, because the point is the city couldn't get these federal grants without conforming its detailed reading of the 50 percent rule to the requirements of federal law... if anything, the only colorable argument I could imagine about any tension with federal law, I could imagine the Department of Housing and Urban Development saying, what do you mean just 50 percent: we say that to the extent feasible you've got to target these jobs to local residents.

And so it might be said that by feeling satisfied with giving one out of every two jobs to a Bostonian, the City of Boston is not doing as much as federal law might require, but I think here plaintiffs would not have standing to raise that issue in the Court below or in this Court.

Now, if I might turn to the public works project--

Unidentified Justice: Before you leave UDAG grants again, Mr. Tribe, for a moment, what is it that the city itself actually does or performs on these UDAG grants that would make those programs proprietary rather than governmental?

Mr. Tribe: --Well, what the city has to do is identify a developer and hold local hearings to make sure that the developer's precise plans will meet the needs of the unemployed and underemployed and particularly the minority residents of the area.

The city having held the hearings then works out through a rather elaborate system of negotiation with the ultimate developer a set of rules that will comply with HUD requirements, comply with respect to the kind of work force that will be retained.

Unidentified Justice: Well, why isn't all that governmental?

Mr. Tribe: Well, it seems to me it's governmental in the same sense that when the government procures something for its own police department, that's governmental.

That would bring it within the very core that every member of this Court, as I read Reeves, seemed to agree about; that is, in Reeves v. Steak, what was troublesome to some members of the Court, as I understood it, about creating an immunity for South Dakota when it sold cement was that selling cement is the sort of activity through which a city might distort the private market.

Whereas here we are talking about the very essence of what it means to be a city; that is, building public infrastructure and doing so in a way that meets the city's own needs.

There is, I think, a confusing distinction between proprietary and governmental which can mean different things in different contexts.

Unidentified Justice: And can slide by the boards.

Mr. Tribe: And it slides back and forth.

And that's why we haven't tried to rely on those labels, not knowing quite what the Court has meant by them, frankly, or what one ought to mean by them.

But we think whatever the labels might be, that it's awfully hard to think of any function with respect to which the small silent voice of the Commerce Clause has less to say.

It is the function that a city performs in building streets and parks in such a way that it meets its own local unemployment needs.

Unidentified Justice: Well, why isn't there some of this federal market participation?

Mr. Tribe: Federal market participation so that Congress should have a dominant voice.

It seems to me Congress has spoken with that voice.

That's where this case is not silent.

What is silent here is the Commerce Clause.

But Congress by statute, and federal agencies by regulation, have specified that this money should be targeted to residents of the city that applies.

To the extent that's so, I would imagine that the thrust of the respondent's argument is that the City of Boston was insufficiently generous to the New England region by going out and getting federal grants that had this condition attached.

Perhaps Boston should have looked for some kind of federal grant which would benefit residents of New Hampshire or Rhode Island.

But so far as Boston has obtained money to supplement its tight fiscal situation from the Federal Government, it is surely impermissible to say that the silent Commerce Clause somehow overrides congressional regulation.

If Congress were, however, to tell Boston, this is money that's available only if you use it to help people in western Massachusetts and perhaps in Rhode Island and Connecticut, it'd be up to Boston whether to accept that money or not.

We're not suggesting that this is an area so governmental, so close to that National League of Cities core, that Congress' spending power could not even have conditions imposed.

But it does seem clear that nothing in the Commerce Clause prevents the city from using these federal dollars as it was intended that they be used.

Now, with respect to the public works projects themselves, I think it is conceded all, around and it seems to me it would have been conceded by the Court below, that if the public works jobs... the jobs rebuilding streets and parks and maybe little city halls... if they were filled through direct hiring by the city, if the city set up a bureaucracy to do public works construction, then the preference for residents as employees of the city would be constitutional under the decisions of this Court, such as McCarthy against Philadelphia Civil Service Commission in 1976.

Indeed, I think that a fair implication, Justice Brennan, of your Shapiro opinion was that residency requirements for welfare would be perfectly acceptable; it was only the durational residency requirement that was... that was a difficulty.

So the problem here seems to be that rather than setting up an unwieldy bureaucracy to hire public works groups, the city has actually created a market for private firms to do some of that public works construction.

And it is said by the Court below that when the hiring operates through private firms rather than directly, that somehow that removes whatever immunity the city might have.

Frankly, I fail to understand why that should be.

I can understand how in a case like Hickland the fact that the State of Alaska tried to use its hold over a scarce and important national resource like oil and gas to kind of trickle out into the entire private economy so that anyone who even supplied something to a subcontractor who had anything to do with the ripple effect of the Alaskan oil and gas was suddenly trapped by the preference.

But nothing like that is happening here.

Subcontractors are included only to make sure that every single job on the project is covered.

It really is not a matter of concern, I would think, to the Federal Constitution how many links there are in the chain of command between the City of Boston and the people who work on the site and--

Unidentified Justice: Mr. Tribe--

Mr. Tribe: --the extension of the subcontractors and the use of private firms in no way broadens the power that the city is asserting here.

It is a vertical extension and not a horizontal one.

Unidentified Justice: --Mr. Tribe, your comment to Justice Brennan made me wonder, what does it take to be a resident?

Mr. Tribe: What does it take to be a resident of Boston?

Unidentified Justice: Yes.

Mr. Tribe: I think that--

Unidentified Justice: Can you move there at the time the job starts?

Mr. Tribe: --If you move there at the time the job starts, and you sign a form saying that you intend to live there, I think the test of domicile is met.

I don't think that the enforcement problem has been very serious, so far as I know.

Unidentified Justice: So if an out-of-state contractor brought his crew in, and they all rented rooms in the fancy hotel, whatever it might be--

Mr. Tribe: Right.

Unidentified Justice: --and stayed there for the duration of the job, they'd qualify?

Mr. Tribe: Well, I think if they said, we intend to leave when the job was done, they would not be residents.

Unidentified Justice: They must have an--

Mr. Tribe: It's the intention to make it your place of domicile.

And I would think that evidence that they intended to vote tomorrow, for example, back in New Hampshire would be used to prove that they were not local residents, or indeed that they intended to vote in the Springfield election tomorrow.

And that's another point that I think it's crucial to stress.

Even if we were talking about something to which the limits of the Commerce Clause were to apply, we are not dealing here in any sense with an attempt by Boston to target any discrimination against out-of-staters.

Of the non-Bostonians who were adversely affected in any potential way by this order in the period from 1978 to 1980, 94 percent were from the State of Massachusetts, only 6 percent were from outside Massachusetts.

And of those who were outside Massachusetts, only half could even potentially been affected; the other half were on work crews that already had at least 50 percent Bostonians.

Unidentified Justice: --Well, on that basis, I suppose you would argue that you could sustain a state provision or a local provision, a city provision, that any kind of construction within the jurisdiction of the enacting government, any construction should employ 50 percent residents?

Mr. Tribe: Justice Black, that would certainly be harder.

Let me tell you why I think there's a difference.

We are not maintaining that building borders around cities is immune to Commerce Clause scrutiny.

Unidentified Justice: Or states.

Or states.

Or states.

Mr. Tribe: Well, certainly, building a border around the state would be subject to Commerce Clause immunity if it applied to the whole public... whole private sector.

We're talking here not about any construction, we're talking about conserving the state's resources as it might conserve welfare resources or public jobs.

Unidentified Justice: Well, why would you suggest that a general, a general provision requiring hiring residents by any contractor, whether it's supported by public funds or not--

Mr. Tribe: Why might I think that--

Unidentified Justice: --why would that violate the Commerce Clause, if it would?

Mr. Tribe: --The reason, I think, Justice White, that it would is that the framework of the Constitution on this subject represents a... an accommodation between two importantly different ideas.

One is the idea that we are, after all, a single nation.

We must sink or swim together.

The other, however, is the idea that we are not a single nation governed only from Washington with states and cities being just little departments of that nation.

That is, what it means to be a state or a city is to be able to pool one's collective efforts and make a collective sacrifice through taxation or make a collective exertion to get federal money, and to use the public goods generated by those public efforts in a way that prefers one's own constituents.

We really wouldn't find quasi-sovereign entities like cities and states making massive exertions if the moment they had public schools they automatically had to be open to everyone in the country who wanted to travel there, if the moment they had a welfare plan more generous than someone else's that residence couldn't be a qualification.

That is the reason that the conception of at least quasi-sovereign entities like cities and states suggests that public goods, public jobs, public works employment, public welfare, can be reserved completely, I would say, but certainly to the extent of 50 percent--

Unidentified Justice: What is the--

Mr. Tribe: --to citizens.

Unidentified Justice: --What case or cases are closest to agreeing with you?

Mr. Tribe: I would suppose the closest cases are McCarthy against Civil Service Commission; Califano v. Torres, to some extent; Doe v. Boulton in 1978, suggesting that there is a fundamental difference between limiting the general medical care available in a state to residents and limiting public medical facilities to residents; probably also the Montana Elk case, to a degree... that is, the Chief Justice--

Unidentified Justice: How about Reeves?

Mr. Tribe: --Well, certainly--

Unidentified Justice: Does that help you at all?

Mr. Tribe: --I thought you... closer to the general theory, Reeves and Hughes not only help, we think this is case is a fortiori.

Unidentified Justice: That's what I mean.

Yes.

Those are the ones that--

Mr. Tribe: Oh, I am sorry, Justice White.

I thought--

Unidentified Justice: --That's all right.

Mr. Tribe: --I guess I was strengthening--

Unidentified Justice: They don't support your theory?

Mr. Tribe: --I think they support the result.

Unidentified Justice: But they support your result.

Yes.

Mr. Tribe: They support the result, and I am interested in the result as well as in the theory.

Unidentified Justice: You are not frightened by the specter of Balkanization if you win?

Mr. Tribe: I think that it's the kind of Balkanization Congress seemed to think would solve local unemployment problems.

So it doesn't scare me any more than it scared this Court on the Prudential case.

Unidentified Justice: And the Constitution?

Mr. Tribe: Pardon?

Unidentified Justice: And the Constitution?

Mr. Tribe: I think the Constitution's concept of Balkanization draws a line at the... sort of at the water's edge of an individual community's collecting their effort to make public goods available to public citizens.

In Hughes v. Alexandria Scrap, for example, I think it's important that every member of the Court, including the dissenting opinion in the Hughes case, took it as an axiom that of course the State of Maryland could take steps designed to make sure that it was not extending its money cleaning up the Virginia environment, that it could reserve its public money to clean up the Maryland environment.

There was a question whether the way it did it might have violated the Commerce Clause.

And the Court understandably divided on that question.

But there is no question that it's permissible for cities and states to collect their effort and take the public goods that they generate that way and reserve them for their own citizens.

But let me assume for a moment that we lost that issue, that the Court were to say that this is not immune.

It seems to me very clear, and I want to make the point briefly before taking up--

Unidentified Justice: Are you going to talk about the privilege and--

Mr. Tribe: --That's exactly what I wanted to talk about, Justice Brennan.

First of all, it's important to note that the State Supreme Court, in not finding any violation of the Privileges and Immunities Clause, noted that the law here did not aim... the executive order... did not aim solely or chiefly at out-of-state residents.

That makes a difference.

This Court has never held the Privileges ad Immunities Clause would apply--

Unidentified Justice: --Because residents of every other community in Massachusetts are--

Mr. Tribe: --That's right.

And in fact, the overwhelming majority of those supposedly hurt are residents of Massachusetts.

More fundamentally, the right--

Unidentified Justice: --Was that not true of the recent Alaska case?

Mr. Tribe: --In the... which of the Alaska cases?

You mean Zobell v. Williams?

Unidentified Justice: Yes.

Mr. Tribe: Well, I guess though Justice O'Connor did have a theory about the Privileges and Immunities Clause which would have made it apply even to internal discrimination, your opinion for the Court did not rely on Privileges and Immunities, and specifically didn't on the ground that it applies only to discrimination against residents of other states.

But I was going to say one other thing about Privileges and Immunities.

And that is that the right to share in a city's public largesse or a state's public largesse in the form of public jobs in a case like McCarthy or welfare in a case like Shapiro, has never been held to be one of those things that must be shared equally regardless of residency.

We do not believe the Privileges or Immunities Clause has any application at all to this case, for those reasons.

And I should like to reserve the remainder of my time.

Chief Justice Burger: Mr. Kingston.

ORAL ARGUMENT OF PAUL J. KINGSTON, ESQ., ON BEHALF OF RESPONDENT MASSACHUSETTS COUNCIL OF CONSTRUCTION EMPLOYERS, INC., ET AL.

Mr. Kingston: Mr. Chief Justice Burger, and may it please the Court:

The City of Boston, often referred to as the "Athens of America" because of its rich cultural and historical heritage, we believe has placed in jeopardy the very premise for which that heritage stands; and that is, the right for all to participate in and benefit by the city's life without regard to their place of residence.

Unidentified Justice: We don't suggest that Boston would have to permit nonresidents to attend their school district, their schools?

Mr. Kingston: No, I don't, Justice White.

But we have an entirely different--

Unidentified Justice: Then how can they reserve their elementary schools to residents?

Mr. Kingston: --They may do so.

Unidentified Justice: How?

Why may they do so?

Mr. Kingston: They may do so because they are involved with something that is integral to their very purpose; and that is, to provide education for their children.

Unidentified Justice: Why can't they, why can't Boston then require that only residents build their school buildings?

Mr. Kingston: Because at that point the city is not acting with respect to an integral government function.

The city is not in the business--

Unidentified Justice: Well, cities normally build school buildings, and school districts normally build school districts... school buildings.

Mr. Kingston: --They do--

Unidentified Justice: Nobody else ever builds them--

Mr. Kingston: --Well, Your Honor--

Unidentified Justice: --except private, private schools do.

Mr. Kingston: --The city does not build the school building in the sense that they have their own employees perform... the city is not in the contracting business.

Unidentified Justice: So what if a school district has a requirement that the school building we contract to have built will be built by residents of our school district?

Mr. Kingston: There'd be no different, Justice White.

The point is that the city is not in the business of contracting.

When the city builds a public building, they normally contract with a... a private contractor.

And therein lies one of the key points of the respondents: that the city is attempting to overreach into a relationship beyond which it should properly be able to exercise some control.

Unidentified Justice: But if it had its own employees to build school buildings, you would say they could confine their employment to residents?

Mr. Kingston: I think, yes, Justice White, they could under the Court's decision in McCarthy v. the Elks--

Unidentified Justice: The Firemen, the Firemen's case?

Mr. Kingston: --The Firemen's case, that's correct.

They could.

But that's a crucial and essential distinction.

The city has not hired its own complement, its own work force to engage in the activities which are here before you.

Approximately two-thirds of the construction activity in 1980 to which the executive order was applicable involved these UDAG projects.

And they do not involve public schools or buildings or roads, they involve private office buildings, luxury condominiums, marinas--

Unidentified Justice: Well, as to those, the federal grant programs seem to mandate some degree of preference for local hiring.

Now, how do you deal with that in the analysis?

Mr. Kingston: --Well--

Unidentified Justice: Because it seems to have had rather little attention, I think.

Mr. Kingston: --Yes, Justice O'Connor.

With respect to that, the... in the first instance, the federal regulations, of course, apply only to the scope of the order as the order applies to UDAGs.

The order also applies to city-funded projects to which the federal regulations--

Unidentified Justice: All right, but let's talk about it insofar as--

Mr. Kingston: --Insofar as--

Unidentified Justice: --the UDAG funds are--

Mr. Kingston: --Involved--

Unidentified Justice: --marked and the federal regulations are applicable.

Mr. Kingston: --All right.

To that extent, Justice O'Connor, in fact, the order does not comport with the boundaries of the federal regulations because the UDAG regulations... which incidentally have been amended since this case began, so I am not precisely sure where all of this fits at the moment... but those federal regulations, insofar as I see, require a preference with respect to unemployed residents.

The order doesn't target that way.

And in the federal regulations would require a preference in the locale where the building project is ongoing.

Unidentified Justice: If we had a case where the city's order matched in all respects the federal--

Mr. Kingston: Yes.

Unidentified Justice: --mandate, what does that do?

Mr. Kingston: At that point, Justice O'Connor, first there are other federal projects other than those administered by HUD, the UDAGs.

The Department of Transportation, for example, also has a set of regulations, and those regulations specifically preclude a municipality from excluding people based on their residence.

But apart from that point, focusing again on the UDAGs, it seems to me the Court would still be left very clearly with the Privileges and Immunities portion of this case, because there there would be personal rights which would have been and, we argue, have been and are adversely affected.

Unidentified Justice: Mr. Kingston.

Mr. Kingston: Yes, Justice Brennan.

Unidentified Justice: Perhaps you have already answered Justice O'Connor to this respect.

But are there any projects covered by this order... it's an executive order, as I understand it... that are not either public works or direct subsidies by the city or these UDAG projects?

Mr. Kingston: Are there any projects which are not--

Unidentified Justice: Within either of those classes.

Mr. Kingston: --Are there... the scope of the order would cover either projects entirely funded with city dollars--

Unidentified Justice: By Boston.

Yes.

Mr. Kingston: --By Boston.

Unidentified Justice: Or covered by UDAG?

Mr. Kingston: Or covered by UDAGs.

Unidentified Justice: But nothing else?

Mr. Kingston: There may be, Justice Brennan, some projects which have not been identified but which would have been covered under the Department of Transportation I alluded to a moment ago.

And in that respect, the federal regulations are, it seems to me, diametrically opposed to the UDAG regulations.

We have not identified which goes up.

But the terms of the order, however--

Unidentified Justice: So for our purposes, may we treat this case as presenting under the executive order only the two classes I have mentioned?

Mr. Kingston: --Two classes being city-funded--

Unidentified Justice: City, city-funded or UDAG.

Mr. Kingston: --No, Your Honor.

Unidentified Justice: I see.

Mr. Kingston: Because the terms of the order apply to all projects--

Unidentified Justice: I see.

Mr. Kingston: --to which the city is the contributing--

Unidentified Justice: Yes.

Mr. Kingston: --source or any project involving federal funds.

Unidentified Justice: Right.

Mr. Kingston: It is not limited to--

Unidentified Justice: It couldn't be more than UDAG?

Mr. Kingston: --It could clearly be more than UDAG.

Unidentified Justice: While I have you interrupted, may I ask one other question?

Did you just suggest that the UDAG coverage of these, UDAG, might be saved, as by the Commerce Clause argument, by the federal regulations requiring the local hiring preferences but that if that were so, you would still make the Privileges and Immunities argument?

Mr. Kingston: That's absolutely correct, Justice Brennan.

Unidentified Justice: But you don't concede, or do you, that the federal regulations really save the UDAG coverage?

Mr. Kingston: No, we don't concede that the federal regulations save the UDAG.

We believe that they are inconsistent with the UDAG because they are not properly targeted to unemployed in the locale.

Unidentified Justice: Mr. Kingston.

Mr. Kingston: Yes, sir.

Unidentified Justice: Do you think that an ordinance which simply carried out and matched perfectly a provision of a UDAG which said that each ordinance which gets UDAG money shall provide for 50 percent employment of residents would violate the Privileges and Immunities Clause if it represented an affirmative sanction of Congress acting under its spending power and the Commerce Clause?

Mr. Kingston: Respondents do.

Unidentified Justice: Well, do you have any case for that?

Mr. Kingston: Your Honor, I don't--

Unidentified Justice: About that precise situation?

Mr. Kingston: --I do not have a case for that precise situation.

But the Commerce Clause representing an affirmative grant of power to the Congress, it would seem to me there would be some substantial reason for acknowledging that the city could put such limitations in its regulations and the city or the states might be able to do by virtue of that grant to the cities and the states what those cities and the states could not otherwise do.

But when it comes to the Privileges and Immunities Clause, Justice Rehnquist, I don't understand that there is that grant of power to the Congress.

Here we are dealing with personal rights, and in respondents' view, the Congress would not have the power to strip individuals of their right to earn a livelihood.

Unidentified Justice: Although Congress might enforce it in a way that the courts might not otherwise; might expand it?

Mr. Kingston: Yes, Justice White.

Unidentified Justice: But your... the question is here whether Congress could limit the reach of the clause beyond that that courts might otherwise find?

Mr. Kingston: And my response, Justice White, is that while I do not have a case--

Unidentified Justice: They could not?

Mr. Kingston: --They could not.

Unidentified Justice: And what, Mr. Kingston, is your answer to Mr. Tribe's argument: yes, but 94 percent of those involved are residents of other communities in Massachusetts, so there's no discrimination between residents of several states?

Mr. Kingston: With respect to the Commerce Clause or the Privileges and Immunities?

Unidentified Justice: Privileges and Immunities.

Mr. Kingston: All right.

With respect to the Privileges and Immunities Clause, we do not, of course, have a de nunc precedent which is available in the Commerce Clause.

However, several points seem appropriate.

One, with respect to the Boston order, suburban residents in Massachusetts had no greater access to the political process which produced the executive order than did non-Massachusetts residents.

Secondly, the state statute which the mayor cited as authority for the promulgation of that executive order, and which the Massachusetts Supreme Judicial Court found to be unconstitutional, that statute in giving the localities a preference or allowing them to make a preference for employment in their... with respect to their residents, gave each community within the Commonwealth of Massachusetts something, whereas non-Massachusetts residents got nothing.

So that--

Unidentified Justice: Well, doesn't that kind of contradict your earlier argument that some suburban residents or residents of Springfield or Northampton don't have access to the political process that enabled Boston to do this?

They do have access to the state process, and I suppose the Massachusetts Legislature could pass a law disenabling Boston from doing something like this.

Mr. Kingston: --Well, my point, Justice Rehnquist, is that the state statute upon which the executive order was premised in itself allowed the suburbs and gave them a preference with respect to public construction works within their locality.

So insofar if the point is that the non-Massachusetts residents had representation in the process, if that was the point, what I am answering is that they did not have representation in the process because the other suburbs were getting something in the deal, if you will.

They were getting a local preference with respect to projects within their communities, whereas the non-Massachusetts residents got nothing.

We recognize the Court's pronouncements in Hughes v. Alexandria Scrap and Reeves that if the city is acting as a market participant, the Commerce Clause is simply not applicable.

But the scope of the order, as we have described, to private construction projects where no city dollars are involved, and the scope of the project to persons with whom the city has no relationship reveals, we believe, the city's role not as a market participant but as a market regulator.

Unidentified Justice: Well, isn't the order restricted to projects where the city is going to be writing the check?

Mr. Kingston: No, Justice White.

With respect to the UDAG's, the city is not--

Unidentified Justice: Well, no, but it is the prime mover.

It is the one that's doing the contracting, isn't it?

Mr. Kingston: --It applies to the Federal Government for these federal funds.

It then, if the Federal Government decides to make that grant, it is a conduit for the transfer of those funds to the developer for the construction of the UDAG project.

When I said earlier these projects relate to condominiums and office buildings, it was no exaggeration.

There is not a UDAG project in the city of Boston which does not fall within one of those categories.

Unidentified Justice: In UDAG projects, what is the premise for the use of the federal funds?

Mr. Kingston: The premise, Justice White, is to leverage private reinvestment in our nation's cities.

Unidentified Justice: Yes, and they are given when a city applies for it, I suppose.

Mr. Kingston: I don't understand that they are automatically given.

The Federal Government--

Unidentified Justice: Well, I know, but nevertheless the Federal Government doesn't go around and shop for this, does it?

Doesn't it depend on some local application?

Mr. Kingston: --Oh, yes, Your Honor, it does.

Unidentified Justice: The city applies.

Mr. Kingston: The city applies.

Unidentified Justice: And so, please help us out as a city.

Mr. Kingston: That's correct.

But that's the extent of it, Your Honor.

Once those federal dollars come in, they are transferred to the developer and the private project begins.

My brother makes reference to the infrastructure.

A certain amount of those UDAG dollars are provided for the traffic rerouting, for the streets and the sewers.

But Respondents' position is, if the city can obtain market participant immunity on that attenuated basis, there is virtually no private construction project in the city which would not merit participation partnership.

Unidentified Justice: Well, it may merit it, but you wouldn't be satisfied to win this case on that basis, I guess, that this regulation, this order, is invalid to the extent that federal funds are used?

Mr. Kingston: No, Your Honor.

We also challenge--

Unidentified Justice: So putting aside those, then you're talking about the city itself paying for municipal improvements.

Mr. Kingston: --With respect--

Unidentified Justice: And you say they are not a market participant in those because they are not using their own employees to build the buildings?

Mr. Kingston: --That's correct.

And in that regard, we consider that by analogy, if you will, this Court's decisions in Reeves and in Hughes can be viewed as prohibiting secondary boycotts.

That is, it prohibits the city from reaching on the party with whom it has privity and prevents the city from dictating terms to subcontractors and employees.

When Maryland with its own tax dollars provided a bounty for the processing of automobile hulks, this Court was careful to point out that Maryland had not sought to prohibit the flow of those hulks out of state.

And in Reeves, when South Dakota preferred its own residents in the sale of cement which had been produced in a state-owned facility, which had been constructed with state dollars, this Court was careful to point out that South Dakota had not attempted to restrict the resale of that cement to state citizens.

But Boston, with somebody else's money for the most part and for economic purposes, is attempting to do something that this Court would have prohibited Maryland and South Dakota from doing.

Unidentified Justice: Mr. Kingston, I guess all we have in front of us, though, is those things to which the executive order would apply, right?

Mr. Kingston: I don't know if I understand, Justice O'Connor.

Unidentified Justice: Well, we have before us the city's executive order requirements.

Mr. Kingston: Yes.

Unidentified Justice: And under the terms of the executive order, it says that it's limited to those projects to which the city is a signatory to the construction contract.

So we aren't really concerned about the others, are we?

Mr. Kingston: Well, I think it continues, Justice O'Connor,

"or to which the city is an applicant for the federal funds. "

The scope of the order continues beyond.

Unidentified Justice: Well, it still signs the contracts in those.

Mr. Kingston: If it signs the contracts, Justice White--

Unidentified Justice: Well, doesn't it?

Mr. Kingston: --I don't believe it does.

But whether or not it does--

Unidentified Justice: You mean it doesn't sign the construction contracts where the federal funds are provided?

Who does?

Mr. Kingston: --The developer would... I'm sorry.

Maybe the developer would sign the contract with the city.

Unidentified Justice: Yes, yes.

Mr. Kingston: But the point is, there is no commitment, there is no entrepreneurial aspect, there is no assumption of risk, there is no financial commitment which the city has made in those UDAG projects.

And insofar as the order applies to traditional or true public works projects which are funded entirely with city dollars, we believe that the order is defective because it reaches beyond the parties with whom it has privity and it attempts to dictate conditions to persons with whom it has no relationship, results we understand clearly would be prohibited by this Court's decisions in Reeves and in Hughes.

Unidentified Justice: You say it attempts to dictate conditions to people with whom it has no relationship.

Mr. Kingston: Yes.

Unidentified Justice: Give me an example, if you would, of the people to whom it's dictating conditions?

Mr. Kingston: It is dictating... first of all, it is dictating to subcontractors the terms of the order, namely that they must hire at least 50 percent Boston residents.

Those subcontractors are not in privity with the city.

Unidentified Justice: Well, but that's a fairly archaic concept if you apply it that way, isn't it?

I mean, lots of owners sign an agreement with a contractor that may provide that each of his subcontractors has to produce a performance bond, and that in a sense is dictating to people not in privity and yet that's fairly commonly done.

Mr. Kingston: That may be so, Justice Rehnquist, but it seems to us that if we're dealing with constitutional matters that normal contractual matters may not always carry.

Unidentified Justice: I think that's true, and that's what I was wondering why you kind of resurrected the notion of privity to analyze a commerce clause problem.

Mr. Kingston: Yes.

Only, Justice Rehnquist, because we understand this Court in Hughes and in Reeves suggested that as a barrier.

At some point the city loses its market participant immunity, remembering that the market participant immunity is an exception in the first instance to the otherwise general and well established rule that cities and states are not entitled to throw up economic barriers in an attempt to isolate themselves from problems that are shared by all.

But there's a second feature, Justice Rehnquist, and that is that the order attempts to preclude non-Boston residents and non-Massachusetts residents from work opportunity.

So to that extent as well, the city is reaching beyond the initial party with whom it has privity in an attempt to dictate conditions which they do not have a right to do.

One of the further basic defects of the executive order is that it invites retaliation.

If Boston is able to have a resident preference scheme such as this, then there is no reason why other cities and states would be precluded from doing the same.

And it would be very difficult for any political leader to resist the temptation to protection, if you will, his constituency in such a manner.

And this again gets to the very purpose of the commerce clause, to prohibit forms of economic balkanization.

With respect to the privileges and immunities clause, just as the executive order triggers scrutiny under the commerce clause, so too it triggers scrutiny under the privileges and immunities clause.

And in this respect, the Court's decision in Hicklin versus Orbeck provides the instruction.

And there, when Alaska's hire statute was struck Alaska was not able to successfully argue that it has as a purpose, as Boston is arguing, an effort to alleviate unemployment, because there was no showing that the out of state residents were a source of the unemployment problem.

Rather, lack of job training and lack of education were.

And further, as in Hicklin, there is no showing that the order is targeted to address the problem before the city.

That is to say, all Boston residents, whether they're employed or not, are given a preference in the employment.

When... the order then contradicts the basic principles of this Court's decisions in Paul versus Virginia, which recognized there was a provision of the Constitution which so tended to constitute the people of this country, one nation, as that clause, and in Toomer versus Witsell, where this Court advised that the primary purpose of the clause was to help fuse into one nation what had been a collection of independent sovereign states.

In sum, if we are to preserve our national economic free trade unit, then we must permit it to flourish without governmental restrictions on business and people who seek work opportunity without regard to their place of residence.

This Court's instruction in Philadelphia versus New Jersey is so very relevant.

There, in striking New Jersey's statute, the Court held that, just as the commerce clause protected her neighbors today, so the commerce clause would protect New Jersey in the future from efforts by one state to isolate itself in the stream of interstate commerce from problems shared by all.

Unemployment is a national problem and it can only be worsened by permitting retaliatory resident preference schemes, and which can only be alleviated by promoting the infrastructure and the instrumentalities of interstate commerce which are embodied in our private enterprise system.

Unidentified Justice: Let me ask just one question on the commerce clause.

What is the market, economic market that you're concerned with primarily?

Mr. Kingston: The economic market is the construction market.

Unidentified Justice: It's the market in which the contractors compete?

You're not talking about the labor market, in other words?

Mr. Kingston: I don't know if I understand.

We speak of the construction market as represented by the contractors and by the laborers.

Unidentified Justice: And 94 percent of the laborers are not out of state people?

Mr. Kingston: Oh, in that respect.

Those statistics are valid for one point in time and they only related to the city-funded projects, not to the UDAG projects.

And by the way, there's been a tenfold increase in the UDAG activity in Boston over the past two or three years.

Unidentified Justice: Does the record tell us what is the impact in any measurable way on interstate trade of any kind, either employees or out of state people?

Mr. Kingston: The agreed statement of facts, Justice Stevens, which the Massachusetts Supreme Judicial Court expressly relied upon in its decision contained the stipulation that out of state, without any numerical limitations, out of state residents will be denied work opportunity, contractors will be discouraged from bidding in Boston construction.

Unidentified Justice: Is there any quantification?

Mr. Kingston: No quantification.

A significant impact, the agreed statement says, on specialty contractors, resulting in fewer competitive bids and higher costs for construction for all of the contractors.

What the--

Unidentified Justice: Would it matter for your interstate commerce theory what the facts actually show, or is it just the fact that there is this potential is enough?

Mr. Kingston: --Well, the agreed statement of facts specifically contained an acknowledgment that it would have those disadvantages and those burdens on interstate commerce.

There was no quantification.

So it did have that.

And what the contractors and the building trade unions and the working people who are represented by the private industry here today, representing private enterprise in this context, what they seek to do is to prevent a discrimination launched at the very essence of their livelihood.

They are journeymen by definition, by history, and hopefully by constitutional guarantee.

We are urging, therefore, the unanimous decision of the Massachusetts Supreme Judicial Court, which by its findings and conclusion held the executive order unconstitutional.

Unidentified Justice: There's no bar to out of state firms or no discrimination against interstate commerce You say that this requirement may keep some out of state firms from coming in because they would have to hire locals.

Mr. Kingston: The agreed statement of facts, Justice White, contained an expression, and the Massachusetts Supreme Judicial Court acknowledged and relied on it, that both in-state and out-of-state contractors would be discouraged from bidding on Boston construction work.

Unidentified Justice: Because they would have to hire locals?

Mr. Kingston: They would have to hire locals.

Some of these contractors, especially the specialty contractors, have permanent work crews, and when they come in they'd have to disband those crews to make up a local composition.

And even with respect to local contractors, there would be a disbanding of work crews in order go be sure there were 50 percent of Boston residents.

Unidentified Justice: Why would that requirement discourage a non-Bostonian?

Mr. Kingston: A contractor?

Unidentified Justice: Yes.

Mr. Kingston: Well, there are inefficiencies.

The New York State Supreme Court in--

Unidentified Justice: It may be inefficient, but they wouldn't bid except at a price that would cover those inefficiencies.

And if they didn't get the contract they wouldn't be doing it, I suppose.

Is that their problem?

Mr. Kingston: --Well, that may be their problem.

But the commerce clause we understand is designed to protect interstate commerce and to prevent city and state regulations which tend to burden interstate commerce, regardless of what the contractors might do, Justice White.

They in fact--

Unidentified Justice: Well, a building code might require certain specifications for a building that some out-of-state contractor is not used to putting up with.

Mr. Kingston: --Correct, Justice White.

However, we are challenging the legality of the order, the constitutionality of the order under the commerce clause and the privileges and immunities clause.

And we consider the record amply supports burdens on interstate commerce.

Chief Justice Burger: Do you have anything further, Mr. Tribe?

REBUTTAL ARGUMENT OF LAURENCE H. TRIBE, ESQ. ON BEHALF OF PETITIONERS

Mr. Tribe: A couple of points, Mr. Chief Justice.

First of all, as to the impact on commerce, I do want to make it very clear that the record did not really leave it so ambiguous.

The court below recognized that the provisions may have little impact on the industry or on its functioning in interstate commerce.

It's just some firms that might be affected.

I think it's clear from Justice White's questions, and he may have been recalling Exxon v. Maryland, that adverse impact on some firms is not a constitutionally cognizable commerce clause violation.

And I just want to remind the Court that, even if there were adverse impact on commerce, we've argued that that impact would be amply justified.

Moreover, the record is clear that the data stipulated at page A-44, the data as to one month, December 1978, are representative.

And in that one month 93 percent of the firms would have been wholly unaffected by the order.

None of the 7 percent that were affected were from out of state.

I don't think there's a viable commerce clause objection here.

I think there also are some confusions that Respondents have spawned with respect to the federally funded part of all this.

Justice White asked, isn't it true that the city signs the checks.

I just want to say, it's entirely true.

This is the city's month.

In the Copley Place project, for example, to say that there's no risk assumed by the city would be rather fanciful.

As our reply brief points out at footnote 11, the grant is to the city, the city has simply loaned the money to the developer, and if it fails the city's loan becomes no good.

We're told in some vague way that there are other federal regulations, maybe of the Department of Transportation, that might be violated here.

I haven't heard that since the complaint in this case, but the fact is that the DOT regulations just specify that there should be no discrimination against out of staters.

And the Supreme Judicial Court in this case, as its reason for not finding a violation of privileges and immunities, said that it's clear that neither on its face nor in fact is this aimed chiefly at out of staters.

Mr. Kingston says that there's something in the executive order before this Court that makes the order apply whenever the city goes out and applies for federal money.

That's not true.

It's just not what the order says.

What the order says is, the city must be a signatory to the construction contract, which it sometimes is as to these federal funds, but not always.

The federal regulations have not been amended since we filed our brief.

You can rely on the version that we have.

And in fact, the statute does not say what the Respondents claim it says.

12 U.S. Code Section 1701(u) does not require that the city become the employer of last resort and target the money at the unemployed.

It says specifically that the jobs assisted under the program be given to lower income persons residing within the unit of government or the metropolitan area.

So it seems to me quite clear that the regulations are complied with here.

Unidentified Justice: In your earlier argument you seemed to rest quite heavily on the proposition that Boston was entitled to have these jobs to take care of its unemployment.

But isn't it an economic reality that for every body occupying a job in one place it means that a body in some other place doesn't have that job?

Mr. Tribe: Well, Mr. Chief Justice, it would be if we were throwing other bodies out of work.

But the point is that the money that's being used to generate two jobs gives one job... that money may come from the Defense Department for all I know.

I mean, I don't know how many jobs it would create in its other uses.

Unidentified Justice: Where does that money come from?

Mr. Tribe: It comes from the federal Treasury in part, but a fifth of it under the law has to be matched by the city, and a lot of it is directly raised from city residents.

Unidentified Justice: Well then, 80 percent of it comes from the Federal Government.

So does that have some bearing on the commerce clause?

Mr. Tribe: I think not at all, Mr. Chief Justice.

It does have bearing on Congress' power to target the money to the city that applies, which it surely can do despite the privileges and immunities clause, unless it is suggested by an extension of this privity concept that the fact that the money gets to Bostonians through the Boston somehow changes the fact, and I don't think that can change anything, any more than it can change the right of the city to prefer Bostonians in the building of schools that it actually does something so strange as hiring private firm to build it.

I don't think the Constitution is violated here.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Unidentified Justice: The Honorable Court is now adjourned until tomorrow at 10:00.