TITLE VI LEGAL MANUAL

This manual provides an overview of the legal principles of Title VI of the Civil Rights Act of 1964, as amended, 42 U.S.C. §2000d, et seq. This document is intended to be an abstract of the general principles and issues that concern Federal agency enforcement, and is not intended to provide a complete, comprehensive directory of all cases or issues related to Title VI. For example, this manual does not address all issues associated with private enforcement. In addition, this manual has cited cases interpreting Title VI to the fullest extent possible, although cases interpreting both Title IX and Section 504 also are included. While statutory interpretation of these laws overlap, they are not fully consistent, and this manual should not be considered to be an overview of any statute other than Title VI.

It is intended that this manual will be updated periodically to reflect significant changes in the law. In addition, policy guidance or other memoranda distributed by the Civil Rights Division to Federal agencies that modify or amplify principles discussed in the manual will be referenced, as appropriate. Comments on this publication, and suggestions as to future updates, including published and unpublished cases, may be addressed to:

Coordination and Review Section
Civil Rights Division
U.S. Department of Justice
Attention: Legal Manual Coordinator
P.O. Box 66560
Washington, D.C. 20035-6560

Telephone and TDD (202) 307-2222
FAX (202) 307-0595
E-mail COR.CRT@USDOJ.GOV

This manual is intended only to provide guidance to Federal agencies and other interested entities, and is not intended to, does not, and may not be relied upon to create any right or benefit, substantive or procedural, enforceable at law by a party against the United States.

I. Overview: Interplay of Title VI with Title IX, Section 504, the Fourteenth Amendment, and Title VII

Title VI prohibits discrimination on the basis of race, color, or national origin in programs and activities receiving Federal financial assistance. Specifically, Title VI provides that

[n]o 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 discrimination under any program or activity receiving Federal financial assistance.

42 U.S.C. § 2000d. Title VI is the model for several subsequent statutes that prohibit discrimination on other grounds in federally assisted programs or activities, including Title IX (discrimination in education programs prohibited on the basis of sex) and Section 504 (discrimination prohibited on the basis of disability). See U.S. Department of Transportation v. Paralyzed Veterans, 477 U.S. 597, 600 n.4 (1986); Grove City College v. Bell, 465 U.S. 555, 566 (1984) (Title IX was patterned after Title VI); Consolidated Rail Corp. v. Darrone, 465 U.S. 624 (1984) (Section 504 patterned after Titles VI and IX).⁽¹⁾ Accordingly, courts have "relied on case law interpreting Title VI as generally applicable to later statutes," Paralyzed Veterans, supra, 477 U.S. at 600 n.4.

It is important to note, however, that not all issues are treated identically in the three statutes. For example, Title VI statutorily restricts claims of employment discrimination to instances where the "primary objective" of the financial assistance is to provide employment. 42 U.S.C. § 2000d-3. No such restriction applies to Title IX or Section 504. See North Haven v. Bell, 456 U.S. 512, 529-30 (1982) ("The meaning and applicability of Title VI are useful guides in construing Title IX, therefore, only to the extent that the language and history of Title IX do not suggest a contrary interpretation."); Bentley v. Cleveland County Board of County Commissioners, 41 F.3d 600 (10^th Cir. 1994) (Section 504 claim alleging discriminatory termination of former employee).

Apart from the provisions common to Title VI, Title IX, and Section 504, courts also have held that Title VI adopts or follows the Fourteenth Amendment's standard of proof for intentional discrimination, and Title VII's standard of proof for disparate impact. See Elston v. Talladega County Board of Education, 997 F.2d 1394, 1405 n.11, 1407 n.14 (11th Cir.), reh'g denied, 7 F.3d 242 (11th Cir. 1993); (see Chapter VIII). Accordingly, cases under these constitutional and statutory provisions may shed light on an analysis concerning the applicability of Title VI to a given situation.

II. Synopsis of Legislative History and Purpose of Title VI

The landmark Civil Rights Act of 1964 was a product of the growing demand during the early 1960s for the Federal Government to launch a nationwide offensive against racial discrimination. In calling for its enactment, President John F. Kennedy identified "simple justice" as the justification for Title VI:

Simple justice requires that public funds, to which all taxpayers of all races contribute, not be spent in any fashion which encourages, entrenches, subsidizes, or results in racial discrimination. Direct discrimination by Federal, State, or local governments is prohibited by the Constitution. But indirect discrimination, through the use of Federal funds, is just as invidious; and it should not be necessary to resort to the courts to prevent each individual violation.

See H.R. Misc. Doc. No. 124, 88th Cong., 1st Sess. 3, 12 (1963).

Title VI was not the first attempt to ensure that Federal monies not be used to finance discrimination on the basis of race, color, or national origin. For example, various prior Executive Orders prohibited racial discrimination in the armed forces, in employment by federally funded construction contractors, and in federally assisted housing.⁽²⁾ Various Federal court decisions also served to eliminate discrimination in individual federally assisted programs.⁽³⁾

Congress recognized the need for a statutory nondiscrimination provision such as Title VI to apply across-the-board "to make sure that the funds of the United States are not used to support racial discrimination." 110 Cong. Rec. 6544 (Statement of Sen. Humphrey). Senator Humphrey, the Senate manager of H.R. 7152, which became the Civil Rights Act of 1964, identified several reasons for the enactment of Title VI. Id. First, several Federal financial assistance statutes, enacted prior to Brown v. Board of Education, 347 U.S. 483 (1954), expressly provided for Federal grants to racially segregated institutions under the "separate but equal" doctrine that was overturned byBrown. Although the validity of these programs was doubtful after Brown, this decision did not automatically invalidate these statutory provisions. Second, Title VI would eliminate any doubts that some Federal agencies may have had about their authority to prohibit discrimination in their programs.

Third, through Title VI, Congress would "insure the uniformity and permanence to the nondiscrimination policy" in all programs and activities involving Federal financial assistance. Id. Thus, Title VI would eliminate the need for Congress to debate nondiscrimination amendments in each new piece of legislation authorizing Federal financial assistance.⁽⁴⁾ As stated by Congressman Celler:

Title VI enables the Congress to consider the overall issue of racial discrimination separately from the issue of the desirability of particular Federal assistance programs. Its enactment would avoid for the future the occasion for further legislative maneuvers like the so-called Powell amendment.

110 Cong. Rec. 2468 (1964).⁽⁵⁾

Fourth, the supporters of Title VI considered it an efficient alternative to litigation. It was uncertain whether the courts consistently would declare that government funding to recipients that engaged in discriminatory practices was unconstitutional. Prior court decisions had demonstrated that litigation involving private discrimination would proceed slowly, and the adoption of Title VI was seen as an alternative to such an arduous route. See 110 Cong. Rec. 7054 (1964) (Statement by Sen. Pastore).

Further, despite various remedial efforts, racial discrimination continued to be widely subsidized by Federal funds. For example, Senator Pastore addressed how North Carolina hospitals received substantial Federal monies for construction, that such hospitals discriminated against blacks as patients and as medical staff, and that, in the absence of legislation, judicial action was the only means to end these discriminatory practices.

That is why we need Title VI of the Civil Rights Act, H.R. 7152 - to prevent such discrimination where Federal funds are involved. . . . Title VI is sound; it is morally right; it is legally right; it is constitutionally right. . . . What will it accomplish? It will guarantee that the money collected by colorblind tax collectors will be distributed by Federal and State administrators who are equally colorblind. Let me say it again: The title has a simple purpose - to eliminate discrimination in Federally financed programs.

Id.

President Lyndon Johnson signed the Civil Rights Act of 1964 into law on July 2, 1964, after more than a year of hearings, analyses, and debate. During the course of congressional consideration, Title VI was one of the most debated provisions of the Act.

III. Title VI Applies to "Persons"

Title VI states "no person" shall be discriminated against on the basis of race, color, or national origin. While the courts have not addressed the scope of "person" as that term is used in Title VI, the Supreme Court has addressed this term in the context of challenges brought under the Fifth and Fourteenth Amendments. See, e.g., Plyler v. Doe, 457 U.S. 202 (1982); Mathews v. Diaz, 426 U.S. 67 (1976). The Supreme Court has held that undocumented aliens are considered "persons" under the equal protection and due process clauses of the Fifth and Fourteenth Amendments. Plyler, supra, 457 U.S. at 210-211; Mathews, supra, 426 U.S. at 77. Since rights protected by Title VI, at a minimum, are analogous to such protections under the Fifth and Fourteenth Amendments, these cases provide persuasive authority as to the scope of "persons" protected by Title VI. See Guardians Assn. v. Civil Service Commission, 463 U.S. 582 (1983); Regents of the University of California v Bakke, 438 U.S. 265 (1978).⁽⁶⁾ Thus, one may assume that Title VI protections are not limited to citizens.

Related to the scope of coverage of Title VI is the issue of standing to challenge program operations as a violation of Title VI. Individuals may bring a cause of action under Title VI if they are excluded from participation in, denied the benefits of, or subjected to discrimination under, any Federal assistance program. See Coalition of Bedford-Stuyvesant Block Association, Inc. v. Cuomo, 651 F. Supp. 1202, 1209 n.2 (E.D.N.Y. 1987; Bryant v. New Jersey Department of Transportation, 1998 WL 133758 (D.N.J.).

IV. "In the United States"

Title VI states that no person "in the United States" shall be discriminated against on the basis of race, color, or national origin by an entity receiving Federal financial assistance. Agency Title VI regulations define "recipients" or "United States" to encompass, inter alia, territories and possessions.⁽⁷⁾ No court has addressed the scope of "United States" or the validity of the regulations including territories and possessions, although we believe such regulations are valid. Cases interpreting the Fifth and Fourteenth Amendments again provide guidance in this analysis.

The Fourteenth Amendment only prohibits violations by the States, and does not encompass the territories. District of Columbia v. Carter, 409 U.S. 418, 424 (1973) (Territories are not "States" and are not subject to the Fourteenth Amendment). The Fifth Amendment equal protection guarantees, however, do apply to the territories. Matter of Naturalization of 68 Filipino War Veterans, 406 F. Supp. 931, 940-41 (N.D. Cal. 1975), citing Balzac v. Puerto Rico, 258 U.S. 298, 312-13 (1922) (Fifth Amendment applies to territories); Downes v. Bidwell, 182 U.S. 244, 282-83 (1901) (same). Thus, all areas under the sovereignty of the United States fall within the combined jurisdiction of the Fifth and Fourteenth Amendments. Accordingly, since Title VI is at least coextensive with the Fifth and Fourteenth Amendments (for purposes of intentional violations), to construe Title VI to apply to the States yet not to the territories would be inconsistent with its constitutional underpinnings, as well as congressional intent that Title VI be interpreted broadly to effectuate its purpose. See 110 Cong. Rec. 6544 (Statement of Sen. Humphrey); S. Rep. No. 64, 100th Cong., 2d Sess. 4-5 (1988), reprinted in 1988 U.S.C.C.A.N. 3, 6-7.

V. Federal Financial Assistance Includes More Than Money

Title VI states that no program or activity receiving "Federal financial assistance" shall discriminate against individuals based on their race, color, or national origin. The clearest example of Federal financial assistance is the award or grant of money. Federal financial assistance, however, also may be in nonmonetary form. See Department of Transportation v. Paralyzed Veterans, 477 U.S. 597, 607 n.11 (1986). As discussed below, Federal financial assistance may include the use or rent of Federal land or property at below market value, Federal training, a loan of Federal personnel, subsidies, and other arrangements with the intention of providing assistance. Federal financial assistance does not encompass contracts of guarantee or insurance, regulated programs, licenses, procurement contracts by the Federal government at market value, or programs that provide direct benefits. It is also important to remember that not only must a program receive Federal financial assistance to be subject to Title VI, but the entity also must receive Federal assistance at the time of the alleged discriminatory act(s). See Huber v. Howard County, MD, 849 F. Supp. 407, 415 (D. Md.1994) (Motion to dismiss claim of discriminatory employment practices under § 504 denied as defendant received Federal assistance during the time of probationary employment and discharge.), aff'd without opinion, 56 F.3d 61 (4th Cir. 1995), cert. denied, 516 U.S. 916; 116 S. Ct. 306 (1995); see also Delmonte v. Dept. of Bus. Pro. ABT of Fla., 877 F. Supp. 1563 (S.D. Fla. 1995).⁽⁸⁾

A. Examples of Federal Financial Assistance

Agency regulations use similar, if not identical, language to define Federal financial assistance:

(1) Grants and loans of Federal funds,

(2) The grant or donation of Federal property and interests in property,

(3) The detail of Federal personnel,

(4) The sale and lease of, and the permission to use (on other than a casual or transient basis), Federal property or any interest in such property without consideration or at a nominal consideration, or at a consideration which is reduced for the purpose of assisting the recipient, or in recognition of the public interest to be served by such sale or lease to the recipient, and

(5) Any Federal agreement, arrangement, or other contract which has as one of its purposes the provision of assistance.

28 CFR § 42.102(c).⁽⁹⁾ No extended discussion is necessary to show that money, through Federal grants, cooperative agreements and loans, is Federal financial assistance within the meaning of Title VI. See Paralyzed Veterans, supra, 477 U.S. at 607. For example:

A State health department receives $372,000 in Federal funds from the Department of Health and Human Services to be distributed to private hospitals for emergency room services. The funds constitute Federal financial assistance to the State health department as well as the private hospitals that are funded, and thus Title VI would apply to all of these entities. See 42 U.S.C. §§ 2000d-4a(1)(a), 4a(3)(A)(ii).
White patients are treated more expeditiously than minority patients at the emergency room of HealWell Hospital, even though the minority patients' medical needs are similar. HealWell receives Medicare funds through its patients. Partial payments by Medicare funds constitute Federal financial assistance to HealWell. See United States v. Baylor University Medical Center, 736 F.2d 1039 (5th Cir. 1984), cert. denied, 469 U.S. 1189 (1985).
United States military veterans are enrolled at Holy University, a private, religious university. The veterans receive payments from the Federal government for educational pursuits and such monies are used by the veterans to pay a portion of their respective tuition payments at Holy University. Although Federal payments are direct to the veterans and indirect to Holy University, the university is receiving Federal financial assistance. See Grove City College v. Bell, 465 U.S. 555 (1984).

As set forth in the regulations, Federal financial assistance may be in the form of a grant or donation of land or use (rental) of Federal property for the recipient at no or reduced cost. Since the recipient pays nothing or a lower amount for ownership of land or rental of property, the recipient is being assisted financially by the Federal agency. Typically, assurances state that this type of assistance is considered to be ongoing for as long as the land or property is being used for the original or a similar purpose for which such assistance was intended. E.g., 28 CFR § 42.105. Thus, if the recipient uses the land or rents property for the same purpose at the time of the alleged discriminatory act, the recipient is receiving Federal financial assistance, irrespective of when the land was granted or donated.⁽¹⁰⁾

For example:

Sixteen years ago, the Department of Defense (DOD) donated land from a closed military base to a State as the location for a new prison. Currently, the prison has been built and houses 130 inmates. Black and Hispanic inmates complain that they tend to be in long-term segregation more often than white inmates, and allege racial discrimination by the prison administrators. Because the State still uses the land donated to it by the DOD for its original (or similar purpose), the State is still receiving Federal financial assistance. See 32 CFR § 195.6.
A police department has a branch office located in a housing project built, subsidized, and operated with Housing and Urban Development (HUD) funds. The police department is not charged rent. Thus, the police department is receiving Federal financial assistance and is subject to Title VI.

Under the Intergovernmental Personnel Act of 1970, Federal agencies may allow a temporary assignment of personnel to State, local, and Indian tribal governments, institutions of higher education, Federally funded research and development centers, and certain other organizations for work of mutual concern and benefit. See 5 U.S.C. § 3372. This detail of Federal personnel to a State or other entity is considered Federal financial assistance, even if the entity reimburses the Federal agency for some of the detailed employee's Federal salary. See Paralyzed Veterans, supra, 477 U.S. at 612 n.14. However, if the State or other entity fully reimburses the Federal agency for the employee's salary, it is unlikely that the entity receives Federal financial assistance. For example:

Two research scientists from the National Institute of Health (NIH) are detailed to a research organization for two years to help research treatments for cancer. NIH pays for three-fourths of the salary of the two detailed employees, while the organization pays the remaining portion. The research organization is considered to be receiving Federal financial assistance since the Federal government is paying a substantial portion of the salary of the detailed Federal employees. The research organization is thus now subject to Title VI.

Another common form of Federal financial assistance provided by many agencies is training by Federal personnel. For example:

A city police department sends several police officers to training at the FBI Academy at Quantico without cost to the city. The police department is considered to have received Federal financial assistance. See Delmonte v. Department of Business & Professional Regulation, 877 F. Supp. 1563 (S.D. Fla. 1995).

B. Direct and Indirect Receipt of Federal Assistance

Federal financial assistance may be received directly or indirectly.⁽¹¹⁾ For example, colleges indirectly receive Federal financial assistance when they accept students who pay, in part, with Federal financial aid directly distributed to the students. Grove City College v. Bell, 465 U.S. 555, 564 (1984)⁽¹²⁾; see also Bob Jones University v. Johnson, 396 F. Supp. 597, 603 (D. S.C. 1974), aff'd, 529 F.2d 514 (4th Cir. 1975). In Bob Jones, supra, the university was deemed to have received Federal financial assistance for participating in a program wherein veterans received monies directly from the Veterans Administration to support approved educational pursuits, although the veterans were not required to use the specific Federal monies to pay the schools for tuition and expenses. Id. at 602-03 & n.22. Even if the financial aid to the veterans did not reach the university, the court considered this financial assistance to the school since this released the school's funds for other purposes. Id. at 602. Thus, an entity may be deemed to have "received Federal financial assistance" even if the entity did not show a "financial gain, in the sense of a net increment in its assets." Id. at 602-03. Aid such as this, and noncapital grants, are equally Federal financial assistance. Id.

C. Federal Action That Is Not Federal Financial Assistance

To simply assert that an entity receives something of value in nonmonetary form from the Federal government's presence or operations, however, does not mean that such benefit is Federal financial assistance. For example, licenses impart a benefit since they entitle the licensee to engage in a particular activity, and they can be quite valuable. Licenses, however, are not Federal financial assistance. Community Television of Southern California v. Gottfried, 459 U.S. 498, 509 (1983) (The Federal Communications Commission is not a funding agency and television broadcasting licenses do not constitute Federal financial assistance); Calif. Assoc. of the Physically Handicapped v. FCC, 840 F.2d 88, 92-93 (D.C. Cir. 1988) (same); see Herman v. United Brotherhood of Carpenters, 60 F.3d 1375, 1381-82 (9th Cir. 1995) (Certification of union by the National Labor Relations Board is akin to a license, and not Federal financial assistance under § 504.).

Similarly, statutory programs or regulations that directly or indirectly support, or establish guidelines for, an entity's operations are not Federal financial assistance. Herman, supra, 60 F.3d at 1382 (Neither Labor regulations establishing apprenticeship programs nor Davis-Bacon Act wage protections are Federal financial assistance.); Steptoe v. Savings of America, 800 F. Supp. 1542, 1548 (N.D. Ohio 1992) (Mortgage lender subject to Federal banking laws does not receive Federal financial assistance.); Rannels v. Hargrove, 731 F. Supp. 1214, 1222-23 (E.D. Pa. 1990) (Federal bank regulations are not Federal financial assistance under the Americans with Disabilities Act).

Furthermore, programs "owned and operated" by the Federal government, such as the air traffic control system, do not constitute Federal financial assistance. Paralyzed Veterans, supra, 477 U.S. at 612; Jacobson v. Delta Airlines, 742 F.2d 1202, 1213 (9th Cir. 1984) (air traffic control and national weather service programs do not constitute Federal financial assistance).⁽¹³⁾

It also should be noted that, by statute, contracts of guarantee and insurance are not Federal financial assistance. 42 U.S.C. § 2000d-4; see Gallagher v. Croghan Colonial Bank, 89 F.3d 275, 277 (6th Cir. 1996) (Default insurance for bank's disbursement of Federal student loans is a "contract of insurance," and therefore not Federal financial assistance). But see Moore v. Sun Bank, 923 F.2d 1423 (11th Cir. 1991) (loans guaranteed by the Small Business Administration constituted Federal financial assistance).

Procurement contracts also are not considered Federal financial assistance.⁽¹⁴⁾ DeVargas v. Mason & Hanger-Silas Mason Co., Inc., 911 F.2d 1377 (10th Cir. 1990); Jacobson, supra, 742 F.2d at 1209; Muller v. Hotsy Corp., 917 F. Supp. 1389, 1418 (N.D. Iowa 1996) (procurement contract by company with GSA to provide supplies is not Federal financial assistance); Hamilton v. Illinois Central Railroad Company, 894 F. Supp. 1014, 1020 (S.D. Miss. 1995). A distinction must be made between procurement contracts at fair market value and subsidies; the former is not Federal financial assistance although the latter is. Jacobson, supra, 742 F.2d at 1209; Mass v. Martin Marietta Corporation, 805 F. Supp. 1530, 1542 (D. Co. 1992) (Federal payments for goods pursuant to a contract, even if greater than fair market value, do not constitute Federal financial assistance). As described in Jacobson and followed in DeVargas, there need not be a detailed analysis of whether a contract is at fair market value, but instead a focus on whether the government intended to provide a subsidy to the contractor. DeVargas, supra, 911 F.2d at 1382-83; Jacobson, supra, 742 F.2d at 1210. In DeVargas, a Department of Energy contract, issued through a competitive bidding process after a determination that a private entity could provide the service in a less costly manner, evidenced no intention to provide a subsidy to the contractor. Id. at 1382-83. For example:

DOD contracts with SpaceElec, a private aerospace company, to develop and manufacture parts for the space shuttle. Under the contract, full price is paid by the DOD for the goods and services to be provided by SpaceElec. Because this is a direct procurement contract by the Federal government, the funds paid to SpaceElec by the DOD do not subject SpaceElec to Title VI.

Finally, Title VI does not apply to direct, unconditional assistance to ultimate beneficiaries, the intended class of private citizens receiving Federal aid. For example, social security payments and veterans' pensions are not Federal financial assistance. Soberal-Perez v. Heckler, 717 F.2d 36, 40 (2d Cir. 1983), cert. denied, 466 U.S. 929 (1984); Bob Jones University, supra, 396 F. Supp. at 602, n.16.⁽¹⁵⁾ Members of Congress, responding to criticisms about the scope of Title VI, repeatedly explained during the congressional hearings in 1964 that Title VI does not apply to direct benefit programs:

The title does not provide for action against individuals receiving funds under federally assisted programs -- for example, widows, children of veterans, homeowners, farmers, or elderly persons living on social security benefits.

110 Cong. Rec. 15866 (1964) (Statement of Senator Humphrey); see 100 Cong. Rec. 6544 (1963) (Statement of Senator Humphrey). See also 110 Cong. Rec. 1542 (1964) (Statement of Rep. Lindsay); 110 Cong. Rec. 13700 (1964) (Statement of Sen. Javits).

VI. What is a Recipient?

A. Regulations

A "recipient" receives Federal financial assistance and/or operates a "program or activity," and therefore its conduct is subject to Title VI. All agency Title VI regulations use a similar if not identical definition of "recipient," as follows:

The term recipient means any State, political subdivision of any State, or instrumentality of any State or political subdivision, any public or private agency, institution, or organization, or other entity, or any individual, in any State, to whom Federal financial assistance is extended, directly or through another recipient, for any program, including any successor, assign, or transferee thereof, but such term does not include any ultimate beneficiary under any such program.

The term primary recipient means any recipient which is authorized or required to extend Federal financial assistance to another recipient for the purpose of carrying out a program.

28 CFR § 42.102(f), (g) (emphasis in original).

Several aspects of the plain language of the regulations should be noted. First, a recipient may be a public (e.g., a State, local or municipal agency) or a private entity. Second, Title VI does not apply to the Federal government. Therefore, a Federal agency cannot be considered a "recipient" within the meaning of Title VI. Third, there may be more than one recipient in a program; that is, a primary recipient (e.g., State agency) that transfers or distributes assistance to a subrecipient (local entity) for ultimate distribution to an ultimate beneficiary. Fourth, a recipient also encompasses a successor, transferee, or assignee of the Federal assistance (property or otherwise), under certain circumstances. Fifth, as discussed in detail below, there is a distinction between a recipient and a beneficiary. Finally, although not addressed in the regulations, a recipient may receive Federal assistance either directly from the Federal government or indirectly through a third party, who is not necessarily another recipient. For example, schools are indirect recipients when they accept payments from students who directly receive Federal financial aid.

B. Direct, Contract Relationship

The most clear means of identifying a "recipient" of Federal financial assistance is to determine whether the entity has voluntarily entered into a relationship with the Federal government akin to a contract and receives Federal assistance under a condition or assurance of compliance with Title VI (and/or other nondiscrimination obligations). Paralyzed Veterans, supra, 477 U.S. at 605-06.

By limiting coverage to recipients, Congress imposes the obligations of § 504 [and Title VI] upon those who are in a position to accept or reject those obligations as part of the decision whether or not to "receive" federal funds.

Id. at 606; see also Soberal-Perez, supra, 717 F.2d at 41. It is important to note that by signing an assurance, the recipient has provided documentation that may be a basis for a breach of contract action. Even without such writing, courts describe Title VI obligations (and other nondiscrimination laws) as similar to a contract; "the recipients' acceptance of the funds triggers coverage under the nondiscrimination provision." Paralyzed Veterans, 477 U.S. at 605. In this scenario, the recipient has a direct relationship with the funding agency and, therefore, is subject to the requirements of Title VI. For example:

Airport operators are recipients of Federal financial assistance pursuant to a statutory program providing funds for airport construction and capital development. Id. at 607.
Hall City Police Department (HCPD) received a grant from the U. S. Department of Justice for community outreach programs. HCPD is considered to be a recipient of Federal financial assistance.
Six years ago, LegalSkool, a law school at a university, was built partly with Federal grants, loans, and interest subsidies in excess of $7 million from the Department of Education (ED). The law school is a "recipient" because of the funding from ED for construction purposes.

While showing that the entity directly receives a Federal grant, loan, or contract, (other than a contract of insurance or guaranty) is the easiest means of identifying a Title VI recipient, this direct cash flow does not describe the full reach of Title VI.⁽¹⁶⁾

C. Indirect Recipient

A recipient may receive funds either directly or indirectly. Grove City College, supra, 465 U.S. at 564-65.⁽¹⁷⁾ For example, educational institutions receive Federal financial assistance indirectly when they accept students who pay, in part, with Federal loans. Although the money is paid directly to the students, the universities and other educational institutions are the indirect recipients. Id.; Bob Jones, supra, 396 F. Supp. at 602.

In Grove City College, supra, the Supreme Court found that there was no basis to create a distinction not made by Congress regarding funding paid directly to or received indirectly by a recipient. 465 U.S. at 564-65. In reaching its conclusion, the Court considered the congressional intent and legislative history of the statute in question to identify the intended recipient. The Court found that the amendments to Title IX are "replete with statements evincing Congress' awareness that the student assistance programs established by the Amendments would significantly aid colleges and universities." Id. at 565-66 (citations omitted). Finally, the Court distinguished student aid programs that are "designed to assist" educational institutions and that allow such institutions an option to participate in, or exclude themselves from, other general welfare programs where individuals, including students, are free to spend the payments without limitation. Id. at 565 n.13.

In addition, as subsequently explained by the Supreme Court in Paralyzed Veterans, it is essential to distinguish aid that flows indirectly to a recipient from aid to a recipient that reaches a beneficiary.

While Grove City stands for the proposition that Title IX coverage extends to Congress' intended recipient, whether receiving the aid directly or indirectly, it does not stand for the proposition that federal coverage follows the aid past the recipient to those who merely benefit from the aid.

477 U.S. at 607.

D. Transferees and Assignees

Agency regulations and assurances often include specific statements on the application of Title VI to successors, transferees, assignees, and contractors. For example, the Department of Justice's regulations state:

In the case where Federal financial assistance is to provide or is in the form of personal property, or real property or interest therein or structures thereon, such assurance shall obligate the recipient, or in the case of a subsequent transfer, the transferee, for the period during which the property is used for a purpose for which the Federal financial assistance is extended or for another purpose involving the provision of similar services or benefits . . . . The responsible Department official shall specify the form of the foregoing assurances for each program, and the extent to which the assurances will be required of subgrantees, contractors, and subcontractors, transferees, successors in interest, and other participants in the program.

28 CFR § 42.105(a)(1) (emphasis added).

Furthermore, land that originally was acquired through a program receiving Federal financial assistance shall include a covenant binding on subsequent purchasers or transferees that requires nondiscrimination for as long as the land is used for the original or a similar purpose for which the Federal assistance is extended. 28 CFR § 42.105(a)(2).⁽¹⁸⁾

E. Primary/Subrecipient Programs

Many programs have two recipients. The primary recipient or conduit directly receives the Federal financial assistance. The primary recipient then distributes the Federal assistance to a subrecipient to carry out a program. See, e.g., 28 CFR § 42.102(g). Both the primary recipient and subrecipient must conform their actions to Title VI. For example:

A State agency, such as the Department of Children and Family Services, receives a substantial portion of its funding from the Federal government. The State agency, as the primary recipient or conduit, in turn, funds local social service organizations, in part, with its Federal funds. The local agencies receive Federal financial assistance, and thus are subject to Section 504 (and Title VI, and other nondiscrimination laws). See Graves v. Methodist Youth Services, Inc., 624 F. Supp. 429 (N.D. Ill. 1985).⁽¹⁹⁾
Under the Older Americans Act, funds are given by the Department of Health and Human Services to State agencies which, in turn, distribute funds according to funding formulas to local agencies operating programs for elderly Americans. Title VI applies to the programs and activities of the State agencies because of each agency's status as a direct conduit recipient passing Federal funds on to subrecipients. Title VI also applies to the local agencies as subrecipients of Federal financial assistance. See Chicago v. Lindley, 66 F.3d 819 (7th Cir. 1995).

F. Contractor and Agent

A recipient may not absolve itself of its Title VI obligations by hiring a contractor or agent to perform or deliver assistance to beneficiaries. Agency regulations consistently state that prohibitions against discriminatory conduct, whether intentional or through race neutral means with a disparate impact, apply to a recipient, whether committed "directly or through contractual or other arrangements." E.g., 28 CFR §§ 42.104(b)(1), (2) (emphasis added). For example:

A recipient public housing authority contracts with a residential management company for the management and oversight of a public housing authority. Employees of the contractor reject prospective tenants based on their race, color, or national origin. The recipient is liable under Title VI for the contractor's actions as the contractor is performing a program function of the recipient.

One also should evaluate the agency's assurances or certifications; such documents can provide an independent basis to seek enforcement. For example, the assurance for the Office of Justice Programs, within the Department of Justice, states, inter alia,

It [the Applicant] will comply, and all its contractors will comply, with the nondiscrimination requirements of the [Safe Streets Act, Title VI, Section 504 . . . .] (emphasis added).

Not only is the recipient responsible for the contractor's actions, but courts have held that a contractor or agent hired by a recipient to perform duties that are integral to the functions of the recipient may be independently subject to Title VI (Section 504 or Title IX). In Horner v. Kentucky High School Athletic Association, 43 F.3d 265, 272 (6th Cir. 1994), for example, the court concluded that a high school athletic association was covered by Title IX since it was designated by statute as the recipient's agent with respect to interscholastic sports and because it performed the recipient's duties and collected dues from schools that received Federal monies. In Smith v. National Collegiate Athletic Association (NCAA), 139 F.3d 180 (3^rd Cir. 1998), the Third Circuit concluded that the NCAA was likewise a recipient covered by Title IX, even though there was no statutory designation of the NCAA as an "agent" as there was in Horner. The fact that the NCAA acted as a surrogate for the colleges and universities, which paid dues to it, was sufficient for the court to find Title IX coverage.

In addition, following a different approach, the Fifth Circuit held that a respiratory care contractor to a hospital was a primary recipient since it was responsible, in part, for Medicaid and Medicare payments to the hospital. Frazier v. Board of Trustees of Northwest Mississippi Regional Medical Center, 765 F.2d 1278 (5th Cir.), modified on other grounds, 777 F.2d 329 (5th Cir. 1985), cert. denied, 476 U.S. 1142 (1986). The court also noted that the absence of a direct connection between the hospital's receipt of Medicaid and Medicare funds (which constitute Federal financial assistance) and payment to the contractor with such Federal monies was not controlling since the contractor's "revenue was in fact linked to the hospital's receipt of Medicare and Medicaid funds. . . " Id. at 1289 (emphasis in original).⁽²⁰⁾

It is this mutual benefit that distinguishes Lifetron's [the contractor's] womb-like financial situation from that of a private contractor with no material relationship to the recipient's receipt of federal funds. Unlike the hospital's privately-contracted mower of lawns, sweeper of floors, or supplier of aspirin, Lifetron contributes in a direct and intangible way to the hospital's claims for reimbursement under Medicare and Medicaid.

Id. at 1290.⁽²¹⁾ Given the contractor's direct role or "financial nexus" to the amount of Medicaid and Medicare funds paid to the hospital, the court considered the contractor a "primary recipient." Id. at 1290 n.29.⁽²²⁾

In contrast, in Hamilton v. Illinois Central Railroad Company, 894 F. Supp. 1014, 1019-22 (S.D. Miss. 1995), the court primarily followed Grove City's focus on congressional intent to determine whether an entity was an indirect recipient subject to Section 504, and Paralyzed Veteran's distinction of indirect recipients and beneficiaries to conclude that a contractor to a recipient was not subject to Section 504. In Hamilton, the court evaluated whether railroads were indirect recipients of Federal financial assistance under the Highway Safety Act of 1973 (HSA). Under the HSA, States receive funds for, inter alia, improvement and construction safety projects at railroad crossings. Id. at 1018. The HSA permits States to enter into contractual agreements with railroads to perform the construction work, and such agreements (and other State projects) are subject to the approval of the Federal Highway Administration (FHA). Id. The State is reimbursed by FHA for 80% of the costs charged by the railroads. Id. at 1019. While recognizing that Federal funds may be received indirectly, the court determined that

Congress intended that the State of Mississippi and/or its political subdivisions receive direct federal assistance for the purpose of improving the safety of highways and railroad crossings. However, nothing contained in the . . . [HSA] or the applicable regulations indicates a Congressional intent to place the burden of improving the safety of the nation's highways and railroad crossings on railroad companies or to provide federal assistance directly to them for that purpose.

Id. The court distinguished Congress' intent and awareness that Federal financial aid would help educational institutions under Title IX from the lack of evidence of any congressional intent to aid or subsidize the railroad companies for HSA objectives. The court concluded that HSA's reimbursement procedures were to "compensate railroad companies for their services." Id. at 1020.⁽²³⁾ The court also followed the analysis of Paralyzed Veterans to conclude that the railroad company benefitted from the statutory program, but was not an indirect recipient. Id. at 1021-22.

G. Recipient v. Beneficiary

Finally, in analyzing whether an entity is a recipient, it is essential to distinguish a recipient from a beneficiary; the former is covered by Title VI while the latter is not.⁽²⁴⁾ Paralyzed Veterans, supra, 477 U.S. at 606-07. An assistance program may have many beneficiaries, that is, individuals and/or entities that directly or indirectly receive an advantage through the operation of a Federal program. Beneficiaries, however, do not enter into any formal contract or agreement with the Federal government where compliance with Title VI is a condition of receiving the assistance. Id.

In almost any major federal program, Congress may intend to benefit a large class of persons, yet it may do so by funding - that is, extending federal financial assistance to - a limited class of recipients. Section 504, like Title IX in Grove City [465 U.S. 555 (1984)], draws the line of federal regulatory coverage between the recipient and the beneficiary.

Id. at 609-10. Title VI was meant to cover only those situations where Federal funding is given to a non-Federal entity which, in turn, provides financial assistance to the ultimate beneficiary, or disburses Federal assistance to another recipient for ultimate distribution to a beneficiary.

For example, in Paralyzed Veterans, the Court held that commercial airlines that used airports and gained an advantage from the capital improvements and construction at airports were beneficiaries, and not recipients, under the airport improvement program. The airport operators, in contrast, directly receive the Federal financial assistance for the airport construction. The Court examined the program statutes and concluded:

Congress recognized a need to improve airports in order to benefit a wide variety of persons and entities, all of them classified together as beneficiaries. [note omitted]. Congress did not set up a system where passengers were the primary or direct beneficiaries, and all others benefitted by the Acts are indirect recipients of the financial assistance to airports.

The statute covers those who receive the aid, but does not extend as far as those who benefit from it. . . Congress tied the regulatory authority to those programs or activities that receive federal financial assistance.

Id. at 607-09.

VII. "Program or Activity"

Title VI prohibits discrimination in "any program or activity," any part of which receives Federal financial assistance. Initially, it should be understood that interpretations of "program or activity" depend on whether one is analyzing the scope of Title VI's prohibitions or evaluating what part of the entity is subject to a potential fund termination or refusal. Further, the Civil Rights Restoration Act of 1987 (CRRA) amended Title VI and related statutes by adding an expansive definition of "program or activity." As described more fully below, the CRRA was passed to restore broad interpretations, consistent with original congressional intent, and to reverse the Supreme Court's narrow ruling in Grove City College, supra.

A. Initial Passage and Judicial Interpretations

When enacted in 1964, Title VI did not include a definition of "program or activity."⁽²⁵⁾ Congress, however, made its intentions clearly known: Title VI's prohibitions were meant to be applied institutionwide, and as broadly as necessary to eradicate discriminatory practices supported by Federal funds. 110 Cong. Rec. 6544 (Statement of Sen. Humphrey); see S. Rep. No. 64, 100th Cong., 2d Sess. 5-7 (1988), reprinted in 1988 U.S.C.C.A.N. 3, 7-9.

The courts, consistent with congressional intent, initially interpreted "program or activity" broadly to encompass the entire institution in question. For example, all of the services and activities of a university were subject to Title VI even if the sole Federal assistance was Federal financial aid to students. See Bob Jones University, supra, 396 F. Supp. at 603; S. Rep. No. 64 at 10, reprinted in 1988 U.S.C.C.A.N. at 12.⁽²⁶⁾

B. Grove City College

In 1984, however, the Supreme Court in Grove City College, supra, severely narrowed the interpretation of "program or activity." 465 U.S. at 571-74. The Court ruled that Title IX's prohibitions against discrimination applied only to the limited aspect of the institution's operations that specifically received the Federal funding. Since the college received Federal funds as a result of Federal financial aid to students, the "program or activity" was the college's financial aid program. Id. at 574. The Court rejected the court of appeal's analysis that receipt of Federal funds for one purpose (financial aid) freed up school funds for other purposes (e.g., athletics) to render the entire university (or at least the other programs that benefitted from 'freed up' funds) a "program or activity." Id. at 572.

Further, the Court held that, although the Federal money was added to the college's general funds, the purpose of the monies was for financial aid, and, therefore, the covered program or activity was the financial aid program. Id. Thus, the receipt of Federal financial aid by some of the students of the college did not subject an entire college to Title IX, but only the operations of the financial aid program. Finally, the Court noted that earmarked funds, such as the Federal financial aid monies, increase resources and obligations of the recipient, while nonearmarked funds are unrestricted in use and purpose. Id. at 573.

C. Civil Rights Restoration Act

The Grove City College interpretation of "program or activity" lasted for four years, until Congress passed the Civil Rights Restoration Act (CRRA), Pub. L. No. 100-259, 102 Stat. 28 (1988). Congress' intent in passing the CRRA was clear. As the Senate Report states:

S.557 was introduced . . . to overturn the Supreme Court's 1984 decision in Grove City College v. Bell, . . . and to restore the effectiveness and vitality of the four major civil rights statutes [Title IX, Title VI, Section 504, and the Age Discrimination Act of 1975] that prohibit discrimination in federally assisted programs.

S. Rep. No. 64 at 2, reprinted in 1988 U.S.C.C.A.N. at 3-4.⁽²⁷⁾ The CRRA includes virtually identical amendments to broadly define "program or activity" (for coverage purposes) for the four cross-cutting civil rights statutes.

The Senate Report provides extensive detail about the history of these statutes, including Congress' original intent that they be broadly interpreted and enforced; the consequences of Grove City College, i.e., the narrow interpretations by courts and agencies that relieved entities of liability for apparent acts of discrimination because of the new, constricted interpretation of program or activity; and detailed explanations of the CRRA's language. Id. at 5-20.⁽²⁸⁾

D. State and Local Governments

The CRRA defines coverage in specific areas. As to State and local governments, Title VI now states:

For the purposes of this subchapter, the term "program or activity" and the term "program" mean all of the operations of--
(A) a department, agency, special purpose district, or other instrumentality of a State or of a local government; or

(B) the entity of such State or local government that distributes such assistance and each such department or agency (and each other State or local government entity) to which the assistance is extended, in the case of assistance to a State or local government;
any part of which is extended Federal financial assistance.

42 U.S.C. § 2000d-4a(1) (emphasis added).

Two courts of appeals and several district courts have interpreted this language, and most of the cases have concerned the scope of § 504. Generally, the entire department or office within a State or local government is identified as the "program or activity."⁽²⁹⁾ For example, if a State receives funding that is designated for a particular State prison, the entire State Department of Corrections is considered the covered "program or activity" (but not, however, the entire State).

In Huber v. Howard County, MD, supra, 849 F. Supp. 407, 415, the court held that the county fire department received Federal financial assistance under § 504 upon evidence that a subunit within the fire department received Federal funds and the salary of one employee was partially paid with Federal funds. The court stated:

While the receipt of federal financial assistance by one department or agency of a county does not render the entire county subject to the provisions of § 504, and while such assistance to one department does not subject another department to the requirements of § 504, if one part of a department receives federal financial assistance, the whole department is considered to receive federal assistance as to be subject to § 504. Id.

Thus, while the CRRA overruled Grove City's narrow interpretation, the amendments were not so broad as to cover an entire local or State government as part of a "program or activity." See Hodges by Hodges v. Public Building Commission of Chicago (I), 864 F. Supp. 1493, 1505 (N.D. Ill. 1994) (City of Chicago "is a municipality and, as such, it does not fit within the definition of 'program or activity' for purposes of Title VI."), reconsideration denied, 873 F. Supp. 128, 132 (N.D. Ill. 1995);⁽³⁰⁾ see also Schroeder v. City of Chicago, 927 F.2d 957, 962 (7th Cir. 1991).⁽³¹⁾

Examples:

If Federal health assistance is extended to a part of a State health department, the entire health department would be covered in all of its operations. However, the entire State government is not considered a recipient just because the health department receives Federal financial assistance.
If the office of a mayor receives Federal financial assistance and distributes it to departments or agencies, all of the operations of the mayor's office are covered along with the departments or agencies which actually receive the aid from the Mayor's office.

It is significant to note that several courts have held that a State need not be a "program or activity" to be a defendant under Title VI. A State is properly included as a defendant if it is partly responsible for or participates in the discriminatory conduct. See United States v. City of Yonkers, 880 F. Supp. 212, 232 (S.D.N.Y. 1995); Association of Mexican-American Educators (AMAE) v. State of California, 836 F. Supp. 1534 (N.D. Cal. 1993); New York Urban League, Inc. v. Metropolitan Transportation Authority, 905 F. Supp. 1266, 1273 (S.D.N.Y. 1995), vacated on other grounds, 71 F.3d 1031 (2d Cir. 1995). The court in AMAE held that a State may be a defendant if it is alleged that it is partly responsible for the alleged discriminatory conduct within the "program or activity." Id. at 1543. In AMAE, plaintiffs claimed that a specific test required by the State of California for certification of teachers violated Title VI (and Title VII). The State established the entity that administered the test and other teacher certification procedures. Id. The court rejected the State's assertion that, since it was not a "program or activity," it was improperly named as a defendant. Id. at 1540-42.

Although the text of § 2000d-4 . . . obviously excludes a state from the definition of "program or activity" . . . nothing in the language of Title VI mandates that an entity must be a "program or activity" to be a Title VI defendant. Indeed, to the extent it has any bearing on this issue, the statutory language points in the opposite direction. Section 2000d-7 clearly provides that a state may be a defendant in a Title VI action.

Id. at 1542 (emphasis in original). Accordingly, summary judgment for dismissal of the State was denied.

Similarly, in United States v. City of Yonkers, 880 F. Supp. 212, 232 (S.D.N.Y. 1995), vacated and remanded on other grounds, 96 F. 3d 600 (2^nd Cir. 1996), the court rejected the State's argument that sovereign immunity applied since it is not a "program or activity." The court stated that not only does the plain language of § 2000d-7 defeat the State's assertion, but also that

nothing in the legislative history of Title VI compels the conclusion that an entity must be a 'program' or 'activity' to be a Title VI defendant. (citation to AMAE) We therefore hold that the State of New York can be sued under Title VI as long as it, along with those of its agencies receiving federal financial assistance, is alleged to have been responsible for a Title VI violation. Id. (note omitted).⁽³²⁾

E. Educational Institutions

The CRRA also defines "program or activity" in an educational context. Title VI (and Title IX, Section 504 and the ADEA of 1975) now provide:

For the purposes of this subchapter, the term "program or activity" and the term "program" mean all of the operations of--

(2)(A) a college, university, or other postsecondary institution, or a public system of higher education; or

(B) a local educational agency (as defined in section 8801 of Title 20), system of vocational education, or other school system;

any part of which is extended Federal financial assistance.

42 U.S.C. § 2000d-4a(2) (emphasis added). It is section 2(A) that specifically overturns the Grove City decision by including all of the operations of a postsecondary institution when any part of that institution is extended Federal financial assistance.⁽³³⁾ See Knight v. State of Alabama, 787 F. Supp. 1030, 1364 (N.D. Ala. 1991) (entire Statewide university system constituted "program or activity," notwithstanding limited autonomy of institutions and even though not all institutions received Federal assistance), aff'd in part, rev'd in part, and vacated in part, 14 F.3d 1534 (11th Cir. 1994).

Senate Report 64 provides several examples of the scope of an educational "program or activity." Federal funding to one school subjects the entire school system to Title VI. S. Rep. No. 64 at 17, reprinted in 1988 U.S.C.C.A.N. at 19. For example, Federal aid to one of three schools operated by the Catholic Diocese would subject all three schools to Title VI. Further, Congress explained that "all of the operations of" encompasses, but is not limited to, "traditional educational operations, faculty and student housing, campus shuttle bus service, campus restaurants, the bookstore, and other commercial activities." Id.

The courts have followed this broad interpretation by ruling that a local educational agency includes school boards, their members, and agents of such boards. Meyers v. Board of Education of the San Juan School District, 905 F. Supp. 1544 (D. Utah 1995)⁽³⁴⁾; Horner, supra, 43 F.3d at 272 (Title IX case); see also Young by and through Young v. Montgomery County (AL) Board of Education, 922 F. Supp. 544 (M.D. Al. 1996) (Court addressed the merits of Title VI claims against the county board of education without comment or question as to the propriety of such claims). In Horner, the Sixth Circuit held that both the school board and its agent for intercollegiate athletics were subject to Title IX. The court addressed this issue in terms of identifying a "program or activity" and "recipient" interchangeably. Id. at 271-72. The court reasoned that the State Department of Education receives the Federal funds, and the Board statutorily "controls and manages," on behalf of the Department, the operations of the schools. Furthermore, the Board's agent (a high school athletic association) was also a recipient since it had statutory authority to perform the Board's functions and received dues from schools that received Federal funds. Id.

The court in AMAE also held that the State's commission for teacher preparation and licensing was part of the "program or activity," i.e., the State's public school system. 836 F. Supp. at 1544-45. Even though the commission did not receive Federal financial assistance, its activities were subject to Title VI since the State educational system of which it is a part received such assistance. Id.

F. Corporations and Private Entities

The CRRA also defines "program or activity" to include certain private entities. The scope of "program or activity" as it applies to a corporation or other private entity depends on the operational purpose of the entity, the purpose of the funds, and the structure of the entity. Title VI provides:

For the purposes of this subchapter, the term "program or activity" and the term "program" mean all of the operations of--

(3)(A) an entire corporation, partnership, or other private organization, or an entire sole proprietorship--
(i) if assistance is extended to such corporation, partnership, private organization, or sole proprietorship as a whole; or

(ii) which is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation; or

(B) the entire plant or other comparable, geographically separate facility to which Federal financial assistance is extended, in the case of any other corporation, partnership, private organization, or sole proprietorship;

any part of which is extended Federal financial assistance.

42 U.S.C. § 2000d-4a(3) (emphasis added).

Generally, funds are given to an entity "as a whole" when such funds further the central or primary purpose of the entity, or the funds are not for a specific, narrow purpose. Senate Report No. 64 provides several examples regarding the application of this section. S. Rep. No. 64 at 17-18, reprinted in 1988 U.S.C.C.A.N. at 19-20. The following principles can be identified based on examples set forth in the Senate Report:

a. Funds provided to ensure the continued operation of a corporation are assistance to the entity "as a whole," and thus all operations of the entire corporation are subject to Title VI. Federal financial assistance extended to a corporation or other entity "as a whole" refers to situations where the corporation receives general assistance that is not designated for a particular purpose. For example:

Federal financial assistance to the Chrysler Company for the purpose of preventing the company from going bankrupt would be an example of assistance to a corporation "as a whole." Id.;

b. When any recipient is principally engaged in the business of providing education, health care, housing, social services, or parks and recreation, and any part of this entity is extended Federal financial assistance, then "program or activity" encompasses all of the operations of the entire entity. For example:

If a private hospital corporation receives Federal funds to operate its emergency room, all of the operations of the hospital (e.g., the operating rooms, pediatrics, discharge and admissions offices, etc.) are subject to Title VI.
Nursewell Corporation owns and runs a chain of five nursing homes as its principal business. One of the five nursing homes receives Federal financial assistance under the Older Americans Act. Because the corporation is principally engaged in the business of providing social services and housing for elderly persons, aid to one home will subject the entire corporation to the requirements of Title VI. See 42 U.S.C. § 2000d-4a(3)(A)(ii); S. Rep. No. 64 at 18, reprinted in 1988 U.S.C.C.A.N. at 20.

c. Funds for a specific purpose or funds that support one of several functions of the recipient would not be considered assistance "as a whole," and thus only that aspect of the recipient's operations would be subject to Title VI. For example:

A grant to a religious organization to enable it to extend assistance to refugees would not be assistance to the religious organization as a whole if the funded program is only one among a number of activities of the organization.
Federal aid which is limited in purpose, e.g., Job Training Partnership Act (JTPA) funds, is not considered aid to the corporation as a whole, even if it is used at several facilities and the corporation has the discretion to determine which of its facilities participate in the program.

d. When Federal assistance is extended to a plant or any other comparable, geographically separate business facility of a corporation or other private entity, only the operations of the specific plant or facility are a "program or activity" subject to Title VI. Further, Federal financial assistance that is earmarked for one or more facilities of a private corporation or other private entity when it is extended is not assistance to the entity "as a whole." Id. For example:

The Dearborn, Michigan plant of General motors is extended Federal financial assistance for first aid training through the State department of health. All of the operations of the Dearborn plant are covered by Title VI, as well as the State health department that distributed the Federal money. However, other geographically separate facilities of General Motors are not considered to be covered just because of the assistance to the Dearborn plant. See S. Rep. No. 64 at 18, reprinted in 1988 U.S.C.C.A.N. at 20-21.

e. The theory of "freeing up" funds for other purposes due to the receipt of Federal aid does not expand the application of Title VI beyond the principles described above.⁽³⁵⁾

G. Catch-All/Combinations of Entities

Finally, the CRRA defines "program or activity" to include the operations of entities formed by any combination of the aforementioned entities. Title VI is amended to read:

For the purposes of this subchapter, the term "program or activity" and the term "program" mean all of the operations of--

(4) any other entity which is established by two or more of the entities described in paragraph (1), (2), or (3);

any part of which is extended Federal financial assistance.

42 U.S.C. § 2000d-4a(4) (emphasis added).

Since any entity under this provision will include a partnership with a public entity, coverage will extend to the entire entity.

[A]n entity which is established by two or more entities described in [Paragraphs] (1), (2), or (3) is inevitably a public venture of some kind, i.e., either a government-private effort (1 and 3), a public education-business venture (2 and 3) or a wholly government effort (1 and 2). It cannot be a wholly private venture under which limited coverage is the general rule. The governmental or public character helps determine institution-wide coverage. . . . Even private corporations are covered in their entirety under (3) if they perform governmental functions, i.e., are "principally engaged in the business of providing education, health care, housing, social services, or parks and recreation."

S. Rep. No. 64 at 19-20, reprinted in 1988 U.S.C.C.A.N. at 21-22. Thus, all of the operations of a partnership between a public and private entity, such as a school and a private corporation, would be subject to Title VI. The Senate Report also notes that coverage under Paragraph (4) applies to the newly created entity; coverage of the separate entities that comprise the partnership or joint venture must be determined independently. Id. at 20, reprinted in 1988 U.S.C.C.A.N. at 22.

VIII. What Constitutes Discriminatory Conduct?

Title VI prohibits discrimination on the basis of "race, color, or national origin . . . under any program or activity receiving Federal financial assistance." 42 U.S.C. § 2000d. The purpose of Title VI is simple: to ensure that public funds are not spent in a way which encourages, subsidizes, or results in racial discrimination. Toward that end, Title VI bars intentional discrimination. See Guardians, 463 U.S. at 607-08; Alexander v. Choate, 469 U.S. 287, 293 (1985). In addition, Title VI authorizes and directs Federal agencies to enact "rules, regulations, or orders of general applicability" to achieve the statute's objectives. 42 U.S.C. § 2000d-1. Most Federal agencies have adopted regulations that prohibit recipients of Federal funds from using criteria or methods of administering their programs that have the effect of subjecting individuals to discrimination based on race, color, or national origin. The Supreme Court has held that such regulations may validly prohibit practices having a disparate impact on protected groups, even if the actions or practices are not intentionally discriminatory. Guardians, 463 U.S. 582; Alexander v. Choate, 469 U.S. at 292-94; see Elston v. Talladega County Board of Education, 997 F.2d 1394, 1406 (11th Cir.), reh'g denied, 7 F.3d 242 (11th Cir. 1993).

Thus, Title VI claims may be proven under two primary theories: intentional discrimination/disparate treatment and disparate impact/effects. Under the first theory, the recipient, in violation of the statute, engages in intentional discrimination based on race, color, or national origin. The analysis of intentional discrimination under Title VI is equivalent to the analysis of disparate treatment under the Equal Protection Clause of the Fourteenth Amendment. Elston, supra, 997 F.2d at 1405 n. 11; Guardians, supra; Alexander v. Choate, 469 U.S. 287, 293; Georgia State Conference of Branches of NAACP v. State of Georgia, 775 F.2d 1403, 1417 (11^th Cir. 1985).

Under the second theory, a recipient, in violation of agency regulations, uses a neutral procedure or practice that has a disparate impact on individuals of a particular race, color, or national origin, and such practice lacks a "substantial legitimate justification." Larry P. v. Riles, 793 F.2d 969, 983 (9^th Cir. 1984); New York Urban League v. State of New York, 71 F.3d 1031, 1038 (2^nd Cir. 1995); Elston, supra, 997 F.2d at 1407. Title VI disparate impact claims are analyzed using principles similar to those used to analyze Title VII disparate impact claims. Young by and through Young v. Montgomery County (AL) Board of Education, 922 F. Supp. 544, 549 (M.D. Al. 1996).

A. Intentional Discrimination/Disparate Treatment

An intent claim alleges that similarly situated persons are treated differently because of their race, color, or national origin. To prove intentional discrimination, one must show that "a challenged action was motivated by an intent to discriminate." Elston, supra, 997 F.2d at 1406. This requires a showing that the decisionmaker was not only aware of the complainant's race, color, or national origin, but that the recipient acted, at least in part, because of the complainant's race, color, or national origin. However, the record need not contain evidence of "bad faith, ill will or any evil motive on the part of the [recipient]." Elston, 997 F.2d at 1406 (quoting Williams v. City of Dothan, Alabama, 745 F.2d 1406, 1414 (11^th Cir. 1984)).

Evidence of discriminatory intent may be direct or circumstantial and may be found in various sources, including statements by decisionmakers, the historical background of the events in issue, the sequence of events leading to the decision in issue, a departure from standard procedure (e.g., failure to consider factors normally considered), legislative or administrative history (e.g., minutes of meetings), a past history of discriminatory or segregated conduct, and evidence of a substantial disparate impact on a protected group. See Arlington Heights v. Metro. Housing Redevelopment Corp., 429 U.S. 252 at 266-68 (1977) (evaluation of intentional discrimination claim under the Fourteenth Amendment); Elston, supra, 997 F.2d at 1406.

Direct proof of discriminatory motive is often unavailable. In the absence of such evidence, claims of intentional discrimination under Title VI may be analyzed using the Title VII burden shifting analytic framework established by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973).⁽³⁶⁾ See Baldwin v. University of Texas Medical Branch at Galveston, 945 F.Supp. 1022, 1031 (S.D.Tex. 1996); Brantley v. Independent School District No. 625, St. Paul Public Schools, 936 F.Supp. 649, 658 n.17 (D.Minn. 1996).⁽³⁷⁾

Applying the McDonnell Douglas principles to a Title VI claim, the investigating agency must first determine if the complainant can raise an inference of discrimination by establishing a prima facie case. The elements of a prima facie case may vary depending on the facts of the complaint, but such elements often include the following:

that the aggrieved person was a member of a protected class;
that this person applied for, and was eligible for, a federally assisted program that was accepting applicants;
that despite the person's eligibility, he or she was rejected; and,
that the recipient selected applicants of a different race, color, or national origin than the complainant -- or that the program remained open and the recipient continued to accept applications from applicants of a different race, color, or national origin than the complainant.⁽³⁸⁾

If the record contains sufficient evidence to establish a prima facie case of discrimination, the investigating agency must then determine if the recipient can articulate a legitimate, nondiscriminatory reason for the challenged action. See McDonnell Douglas, 411 U.S. at 802. If the recipient can articulate a nondiscriminatory explanation for the alleged discriminatory action, the investigating agency must determine whether the record contains sufficient evidence to establish that the recipient's stated reason was a pretext for discrimination. Id. In other words, the evidence must support a finding that the reason articulated by the recipient was not the true reason for the challenged action, and that the real reason was discrimination based on race, color, or national origin.

Similar principles may be used to analyze claims that a recipient has engaged in a "pattern or practice" of unlawful discrimination. Such claims may be proven by a showing of "more than the mere occurrence of isolated or 'accidental' or sporadic discriminatory acts." See International Brotherhood of Teamsters v. United States, 431 U.S. 324, 336 (1977). The evidence must establish that a pattern of discrimination based on race, color, or national origin was the recipient's "standard operating procedure the regular rather than the unusual practice." Id. Once the existence of such a discriminatory pattern has been proven, it may be presumed that every disadvantaged member of the protected class was a victim of the discriminatory policy, unless the recipient can show that its action was not based on its discriminatory policy. Id. at 362.

It is also important to remember that some claims of intentional discrimination may involve the use of policies or practices that explicitly classify individuals on the basis of membership in a particular group. Such "classifications" may constitute unlawful discrimination if based on characteristics such as race, color, national origin, sex, etc. For example, the Supreme Court held in a Title VII case that a policy that required female employees to make larger contributions to the pension fund than male employees created an unlawful classification based on sex. See City of Los Angeles, Department of Water and Power v. Manhart, 435 U.S. 702 (1978). The investigation of such claims should focus on the recipient's reasons for utilizing the challenged classification policies. Most such policies will be deemed to violate Title VI, unless the recipient can articulate a lawful justification for classifying people on the basis of race, color, or national origin.

B. Disparate Impact/Effects

The second primary theory for proving a Title VI violation is based on Title VI regulations and is known as the discriminatory "effects" or disparate impact theory. As noted previously, Title VI authorizes Federal agencies to enact regulations to achieve the statute's objectives. Most Federal agencies have adopted regulations that apply the disparate impact or effects standard. For example, the Department of Justice regulations state:

(2) A recipient, in determining the type of disposition, services, financial aid, benefits, or facilities which will be provided under any such program, or the class of individuals to whom, or the situations in which, such will be provided under any such program, or the class of individuals to be afforded an opportunity to participate in any such program, may not, directly or through contractual or other arrangements, utilize criteria or methods of administration which have the effect of subjecting individuals to discrimination because of their race, color, or national origin, or have the effect of defeating or substantially impairing accomplishment of the objectives of the program as respects individuals of a particular race, color, or national origin.

28 C.F.R. § 42.104(b)(2) (emphasis added).

Pursuant to such regulations, all entities that receive Federal funding enter into standard agreements or provide assurances that require certification that the recipient will comply with the implementing regulations under Title VI. Guardians, 463 U.S. 582, 642 n. 13. The Supreme Court has held that these regulations may validly prohibit practices having a disparate impact on protected groups, even if the actions or practices are not intentionally discriminatory. Guardians, supra; Alexander v. Choate, supra.

Many subsequent cases have also recognized the validity of Title VI disparate impact claims. See Villanueva v. Carere, 85 F.3d 481 (10^th Cir. 1996); New York Urban League v. New York, 71 F.3d 1031, 1036 (2^nd Cir. 1995); Chicago v. Lindley, 66 F.3d 819 (7^th Cir. 1995); David K. v. Lane, 839 F.2d 1265 (7^th Cir. 1988); Gomez v. Illinois State Bd. Of Educ., 811 F.2d 1030 (7^th Cir. 1987); Georgia State Conf. v. Georgia, 775 F.2d 1403 (11^th Cir. 1985); Larry P. v. Riles, 793 F.2d 969 (9^th Cir. 1984). ⁽³⁹⁾ In addition, by memorandum dated July 14, 1994, the Attorney General directed the Heads of Departments and Agencies to "ensure that the disparate impact provisions in your regulations are fully utilized so that all persons may enjoy equally the benefits of Federally financed programs."

Under the disparate impact theory, a recipient, in violation of agency regulations, uses a neutral procedure or practice that has a disparate impact on protected individuals, and such practice lacks a substantial legitimate justification. The elements of a Title VI disparate impact claim derive from the analysis of cases decided under Title VII disparate impact law. New York Urban League, supra, 71 F.3d at 1036.

In a disparate impact case, the focus of the investigation concerns the consequences of the recipient's practices, rather than the recipient's intent. Lau v. Nichols, 414 U.S. 563 at 568 (1974). To establish liability under a disparate impact scheme, the investigating agency must first ascertain whether the recipient utilized a facially neutral practice that had a disproportionate impact on a group protected by Title VI.⁽⁴⁰⁾ Larry P. v. Riles, 793 F.2d 969, 982; Elston, 997 F.2d at 1407 (citing Georgia State Conference, 775 F.2d 1403, 1417 (11^th Cir. 1985)).

If the evidence establishes a prima facie case, the investigating agency must then determine whether the recipient can articulate a "substantial legitimate justification" for the challenged practice. Georgia State Conference, 775 F.2d at 1417. "Substantial legitimate justification" is similar to the Title VII concept of "business necessity," which involves showing that the policy or practice in question is related to performance on the job. Griggs v. Duke Power, 401 U.S. 424 (1971).

To prove a "substantial legitimate justification," the recipient must show that the challenged policy was "necessary to meeting a goal that was legitimate, important, and integral to the [recipient's] institutional mission." Sandoval, supra, 1998 WL 295891, at *36 (M.D.Ala.), F.Supp. , (quoting Elston, 997 F.2d at 1413). The justification must bear a "manifest demonstrable relationship" to the challenged policy. Georgia State Conference, 775 F.2d. at 1418. See, e.g., Elston (In an education context, the practice must be demonstrably necessary to meeting an important educational goal, i.e. there must be an "educational necessity" for the practice).

If the recipient can make such a showing, the inquiry must focus on whether there are any "equally effective alternative practices" that would result in less racial disproportionality or whether the justification proffered by the recipient is actually a pretext for discrimination. Id. See generally, McDonnell Douglas, 411 U.S. 792. Evidence of either will support a finding of liability.

Courts have often found Title VI disparate impact violations in cases where recipients utilize policies or practices that result in the provision of fewer services or benefits, or inferior services or benefits, to members of a protected group. In Larry P. v. Riles, 793 F.2d 969 (9^th Cir. 1984), the Ninth Circuit applied a discriminatory effects test to analyze the Title VI claims of a class of black school children who were placed in special classes for the "educable mentally retarded" ("EMR") on the basis of non-validated IQ tests. The Ninth Circuit upheld the district court's finding that use of these IQ tests for placement in EMR classes constituted a violation of Title VI. Id. at 983. Similarly, in Sandoval, supra, the court held that discrimination on the basis of language, in the form of an English-only policy, had an unjustified disparate impact on the basis of national origin, and thus violated Title VI. Sandoval, 1998 WL 295891, *46 (M.D.Ala.). See Meek v. Martinez, 724 F.Supp. 888 (S.D.Fla. 1987) (Florida's use of funding formula in distributing aid resulted in a substantially adverse disparate impact on minorities and the elderly). See also, Campaign for Fiscal Equity, Inc. v. State of New York, 86 N.Y.2d 307, 655 N.E.2d 1178 (N.Y. Ct. App. Jun 15, 1995) (Prima facie case established where allocation of educational aid had a racially disparate impact).

In evaluating a potential disparate impact claim under Title VI, it is important to examine whether there is a substantial legitimate justification for the challenged practice and whether there exists an alternative practice that is comparably effective with less of a disparate impact. See Elston, 997 F.2d at 1407.

For example, the Second Circuit in New York Urban League, supra, reversed the district court's preliminary injunction for its failure to consider whether there was a "substantial legitimate justification" for a subway fare increase that had an adverse impact. 71 F.3d at 1039.

[B]ut the district court did not consider, much less analyze, whether the defendants had shown a substantial legitimate justification for this allocation. The MTA and the State identified several factors favoring a higher subsidization of the commuter lines. By encouraging suburban residents not to drive into the City, subsidization of the commuter rails minimizes congestion and pollution levels associated with greater use of automobiles in the city; encourages business to locate in the City; and provides additional fare-paying passengers to the City subway and bus system. In these respects and in others, subsidizing the commuter rails may bring material benefits to the minority riders of the subway and bus system. The district court dismissed such factors, concluding that the MTA board did not explicitly consider them before voting on the NYCTA and commuter line fare increases. That finding is largely irrelevant to whether such considerations would justify the relative allocation of total funds to the NYCTA and the commuter lines.⁽⁴¹⁾

Similarly, in Young by and through Young, supra, 922 F.Supp 544, the court ruled that even if a disparate impact were assumed, the defendants had established a "substantial legitimate justification."

[T]he Defendants presented evidence that Policy IDFA was adopted to address concerns that the M to M transfer program was being used to facilitate athletic recruiting in the Montgomery County school system and to help revitalize Montgomery's west side [minority] high schools. Both of these justifications are substantial and legitimate because they evince a genuine attempt by the Board of Education to improve the quality of education offered in [the] County.

Id. at 551.

If a substantial legitimate justification is identified, the third stage of the disparate impact analysis is the plaintiff's demonstration of a less discriminatory alternative. Elston, supra at 1407; see also, Young by and through Young, supra, 922 F.Supp at 551 (where defendants established a substantial legitimate justification, plaintiffs failed to demonstrate existence of an equally effective alternative practice).

C. Retaliation

A complainant may bring a retaliation claim under Title VI or under a Title VI regulation that prohibits retaliation. For example, most agency Title VI regulations provide that "[n]o recipient or other person shall intimidate, threaten, coerce, or discriminate against any individual for the purpose of interfering with any right or privilege secured by [Title VI], or because he has made a complaint, testified, assisted, or participated in any manner in an investigation, proceeding or hearing under this subpart." 28 C.F.R. § 42.108(e) (Department of Justice Regulation).

To establish a prima facie case of retaliation, the investigating agency must first determine if the complainant can show (1) that he or she engaged in a protected activity, (2) that the recipient knew of the complainant's protected activity, (3) that the recipient took some sort of adverse action against the complainant, and (4) that there was a causal connection between the complainant's protected activity and the recipient's adverse actions. See Davis v. Halpern, 768 F.Supp. 968, 985 (E.D.N.Y. 1991). (Defendants's summary judgment motion to dismiss Title VI retaliation claim was denied because plaintiff established evidence of prima facie case).

Once a prima facie case of retaliation has been established, the investigating agency must then determine if the recipient can articulate a "legitimate non-discriminatory reason" for the action. Id. If the recipient can offer such a reason, the investigating agency must then show that recipient's proffered reason is pretextual and that the recipient's actual reason was retaliation. Id. A showing of pretext is sufficient to support an inference of retaliation. Id.

IX. Employment Coverage

A. Scope of Coverage

While Title VI was not meant to be the primary Federal vehicle to prohibit employment discrimination, it does forbid employment discrimination by recipients in certain situations. If a primary objective of the Federal financial assistance to a recipient is to promote employment, then the recipient's employment practices are subject to Title VI. 42 U.S.C. § 2000d-3.⁽⁴²⁾

Nothing contained in [Title VI] shall be construed to authorize action under [Title VI] 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.

Id. (emphasis added). In addition, as explained below, a recipient's employment practices also are subject to Title VI where those practices negatively affect the delivery of services to ultimate beneficiaries.

For example, if a recipient built a temporary shelter with funds designed to provide temporary assistance to dislocated individuals, the employment practices of the recipient with respect to the construction of such facility are not subject to Title VI. However, if the recipient built the same facility with funds received through a public works program whose primary objective is to generate employment, the employment practices are subject to Title VI. In the former case, the program's benefit was to provide shelter to dislocated individuals while, in the latter case, the benefit was the employment of individuals to build the facility.

Thus, to sustain a claim of employment discrimination under Title VI, the plaintiff has an additional threshold requirement: not only must the plaintiff establish that the recipient receives Federal financial assistance, but also that the "primary objective" of the Federal funding is to provide employment. Reynolds v. School District No. 1, Denver, CO, 69 F.3d 1523, 1531 (10th Cir. 1995) (motion to dismiss granted due to plaintiff's failure to show that the primary purpose of Federal assistance was to provide employment); Association Against Discrimination in Employment v. City of Bridgeport, 647 F.2d 256, 276 (2d Cir. 1981) (failure to prove all elements of employment discrimination claim due to lack of evidence of primary purpose of Federal funds), cert. denied, 455 U.S. 988 (1982); Rosario-Olmedo v. Community School Board for District 17, 756 F. Supp. 95, 96-97 (E.D.N.Y. 1991) (Title VI claim dismissed for failure to plead primary objective of Federal funds is employment). In Reynolds, supra, plaintiff's assertion that Federal funds paid, in part, the salary of an employee was insufficient, since plaintiff did not show that the primary objective of the Federal funds was employment rather than general funding of school programs. Id. at 1532.

Further, where employment discrimination by a recipient has a secondary effect on the ability of beneficiaries to meaningfully participate in and/or receive the benefits of a federally assisted program in a nondiscriminatory manner, those employment practices are within the purview of Title VI.⁽⁴³⁾ Agency regulations specifically address this principle in identical or similar language:

In regard to Federal financial assistance which does not have providing employment as a primary objective, the provisions of paragraph (c)(1) [prohibitions where objective is employment] apply to the employment practices of the recipient if discrimination on the grounds of race, color, or national origin in such employment practices tends, on the grounds of race, color, or national origin, to exclude persons from participation in, to deny them the benefits of or to subject them to discrimination under the program receiving Federal financial assistance. In any such case, the provisions of paragraph (c)(1) of this section shall apply to the extent necessary to assure equality of opportunity to and nondiscriminatory treatment of beneficiaries.

28 CFR § 42.104(c)(2); see also 15 CFR § 8.4(c)(2) (Commerce); 34 CFR § 100.3(c)(3) (Education). In this situation, there is a causal nexus between employment discrimination and discrimination against beneficiaries. United States v. Jefferson County Board of Education, 372 F.2d 836, 883 (5th Cir. 1966) ("Faculty integration is essential to student desegregation."), cert. denied. sub nom., Caddo Parish School Board v. United States, 389 U.S. 840 (1967); Caulfield v. Board of Education of City of New York, 486 F. Supp. 862, 876 (E.D.N.Y. 1979) (characterization of infection theory where employment practices affect beneficiaries, i.e., students); Marable v. Alabama Mental Health Board, 297 F. Supp. 291, 297 (M.D. Ala. 1969) (Patients of State mental health system have standing to challenge segregated employment practices which affect delivery of services to patients.).

Section 2000d-3 does not exempt a recipient's employment practices from other applicable Federal statutes, executive orders, or regulations. United States by Clark v. Frazer, 297 F. Supp. 319, 321-322 (M.D. Ala. 1968); see also, Contractors Ass'n. of Eastern Pa. v. Secretary of Labor, 442 F.2d 159, 173 (3rd. Cir. 1971), cert. denied., 404 U.S. 854 (1971). Furthermore, a recipient's compliance with State and local merit systems for employment may not constitute compliance with Title VI. 28 CFR § 42.409.

B. Regulatory Referral of Employment Complaints to EEOC

In 1983, the Department of Justice and the Equal Employment Opportunity Commission (EEOC) published "Procedures for Complaints of Employment Discrimination Filed Against Recipients of Federal Financial Assistance." 28 CFR §§ 42.601-42.613 (DOJ); 29 CFR §§ 1691.1 - 1691.13 (EEOC). In summary, the procedures provide that a Federal agency receiving a complaint of employment discrimination against a recipient that is covered by both Title VI (and/or other grant-related prohibitions against discrimination) and Title VII should refer the complaint to the EEOC for investigation and conciliation.⁽⁴⁴⁾ 28 CFR §§ 42.605(d), 42.609. If the EEOC determines that there is discrimination and is unable to resolve the complaint, the rule calls for the funding agency to evaluate the matter, "with due weight to the EEOC's determination that reasonable cause exists," and to take appropriate enforcement action. 28 CFR § 42.610. Where complaints allege a pattern and practice of discrimination and there is dual coverage, agencies have the option of keeping the complaint rather than referring it.

The reason for this regulation is clearly stated in the Preamble to the notice in the Federal Register:

The rule . . . will reduce duplicative efforts by different Federal agencies to enforce differing employment discrimination prohibitions and thereby will reduce the burden on employers covered by more than one of those prohibitions. At the same time it will allow the Federal fund granting agencies to focus their resources on allegations of services discrimination.

48 Fed. Reg. 3570 (1983).

X. Federal Funding Agency Methods to Evaluate Compliance

The Federal agency providing the financial assistance is primarily responsible for enforcing Title VI as it applies to its recipients. Agencies have several mechanisms available to evaluate whether recipients are in compliance with Title VI, and additional means to enforce or obtain compliance should a recipient's practices be found lacking. Evaluation mechanisms, discussed below, include pre-award reviews, post-award compliance reviews, and investigations of complaints.

A. Pre-Award Reviews

An agency's decision to extend Federal financial assistance should involve an evaluation of the applicant's proposed means of furthering the goals of the underlying program as well as compliance with Title VI and other nondiscrimination laws. See Shannon v. United States Dept. of Housing and Urban Dev., 436 F.2d 809, 819 (3rd Cir. 1970).

1. Assurances of Compliance

The Title VI Coordination Regulations, (as well as the Section 504 coordinating regulation), require that agencies obtain assurances of compliance from prospective recipients. 28 CFR §§ 41.5(a)(2), 42.407(b). Regulations requiring applicants to execute an assurance of compliance as a condition for receiving assistance are valid. Grove City College, supra, 465 U.S. at 574-575 (Title IX assurances); Gardner v. Alabama, 385 F.2d 804 (5th Cir. 1967), cert. denied, 389 U.S. 1046 (1968) (Title VI assurances). If an applicant refuses to sign a required assurance, the agency may deny assistance only after providing notice of the noncompliance, an opportunity for a hearing, and other statutory procedures. 42 U.S.C. § 2000d-1; 28 CFR § 50.3 II.A.1. However, the agency need not prove actual discrimination at the administrative hearing, but only that the applicant refused to sign an assurance of compliance with Title VI (or similar nondiscrimination laws). Grove City College, supra, 465 U.S. at 575. Assurances serve two important purposes: they remind prospective recipients of their nondiscrimination obligations, and they provide a basis for the Federal government to sue to enforce compliance with these statutes. See U.S. v. Marion County School District, 625 F.2d 607, 609, 612-13 (5th Cir.), reh'g denied, 629 F.2d 1350 (5th Cir. 1980), cert. denied, 451 U.S. 910 (1981).

2. Deferral of the Decision Whether to Grant Assistance

Neither Title VI (nor Title IX or Section 504) specifically addresses if an agency may defer the decision regarding whether to grant assistance while conducting an investigation, during negotiations for voluntary compliance, or during enforcement proceedings after a violation is found. However, there are both strong policy reasons and ample authority for concluding that agencies have this power.

The "Guidelines for the Enforcement of Title VI, Civil Rights Act of 1964," (the "Title VI Guidelines") specifically state that agencies may defer assistance decisions: "In some instances . . . it is legally permissible temporarily to defer action on an application for assistance, pending initiation and completion of [statutory remedial] procedures--including attempts to secure voluntary compliance with title VI." 28 CFR § 50.3 I.A. Thus, deferral may occur while negotiations are ongoing to special condition the award, during the pendency of a lawsuit to obtain relief, or during proceedings aimed at refusing to grant the requested assistance.⁽⁴⁵⁾

This interpretation is a reasonable, and even necessary, application of the statutory remedial scheme. The congressional authorization to obtain relief pre-award would be sharply reduced, if not rendered a near nullity, if agencies could not postpone the assistance decision while spending the time needed to conduct a full and fair investigation and while seeking appropriate relief. Furthermore, the Attorney General's administrative interpretation is entitled to deference. See, e.g., Chevron U.S.A. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-45 (1984).⁽⁴⁶⁾

The Title VI Guidelines recommend that agencies adopt a flexible, case-by-case approach in assessing when deferral is appropriate, and consider the nature of the potential noncompliance problem. Where an assistance application is inadequate on its face, such as when the applicant has failed to provide an assurance or other material required by the agency, "the agency head should defer action on the application pending prompt initiation and completion of [statutory remedial] procedures." 28 CFR § 50.3 II.A.1 (emphasis added). Where the application is adequate on its face but there are "reasonable grounds" for believing that the applicant is not complying with Title VI, "the agency head may defer action on the application pending prompt initiation and completion of [statutory remedial] procedures." Id. II.A.2 (emphasis added).⁽⁴⁷⁾

When action on an assistance application is deferred, remedial efforts "should be conducted without delay and completed as soon as possible." Id. I.A. Agencies should also be cognizant of the time involved in a deferral to ensure that a deferral not become "tantamount to a final refusal to grant assistance." Id. II.C. The agency should not completely rule out deferrals where time is of the essence in granting the assistance, but should consider special measures that may be taken to seek expedited relief (e.g., by referring the matter to the Department of Justice to file suit for interim injunctive relief).

3. Pre-Award Authority of Recipients vis-a-vis Subrecipients

The Title VI Guidelines provide that the "same [pre-award] rules and procedures would apply" where a Federal assistance recipient is granted discretionary authority to dispense the assistance to subrecipients. Id. III:

[T]he Federal Agency should instruct the approving agency -- typically a State agency -- to defer approval or refuse to grant funds, in individual cases in which such action would be taken by the original granting agency itself . . . . Provision should be made for appropriate notice of such action to the Federal agency which retains responsibility for compliance with [Title VI compliance] procedures. Id.

Thus, the Title VI Guidelines support agencies requiring that recipients/subgrantors obtain assurances of compliance from subrecipients.⁽⁴⁸⁾ When the recipient receives information pre-award that indicates noncompliance by an applicant for a subgrant, recipients may defer making the grant decision, may seek a voluntary resolution and, if no settlement is reached, (after complying with statutory procedural requirements), may refuse to award assistance.

4. Pre-Award Data Collection

Section 42.406(d) of the Coordination Regulations lists the types of data that should be submitted to and reviewed by Federal agencies prior to granting funds. In addition to submitting an assurance that it will compile and maintain records as required, an applicant should provide: (1) notice of all lawsuits (and, for recipients, complaints) filed against it; (2) a description of assistance applications that it has pending in other agencies and of other Federal assistance being provided; (3) a description of any civil rights compliance reviews of the applicant during the preceding two years; and (4) a statement as to whether the applicant has been found in noncompliance with any relevant civil rights requirements. Id.

The Coordination Regulations require that agencies "shall make [a] written determination as to whether the applicant is in compliance with Title VI." 28 CFR § 42.407(b). Where a determination cannot be made from the submitted data, the agency shall require the submission of additional information and take other steps necessary for making a compliance determination, which could include communicating with local government officials or community organizations and/or conducting field reviews. Id.

5. Recommendations Concerning Pre-award Reviews

Agenci

TITLE VI LEGAL MANUAL

U.S. Department of Justice Civil Rights Division P.O. Box 65560 Washington, D.C. 20035-6560 SEPTEMBER, 1998

TITLE VI LEGAL MANUAL TABLE OF CONTENTS

U.S. Department of Justice
Civil Rights Division
P.O. Box 65560
Washington, D.C. 20035-6560

SEPTEMBER, 1998