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03/16/93 ABSALOM I. JORDAN v. PUBLIC SERVICE

March 16, 1993

ABSALOM I. JORDAN, JR., PETITIONER
v.
PUBLIC SERVICE COMMISSION, RESPONDENT, POTOMAC ELECTRIC POWER COMPANY, INTERVENOR



On Petition for Review of a Decision of the Public Service Commission.

Before Schwelb, Wagner and King, Associate Judges.

The opinion of the court was delivered by: Schwelb

SCHWELB, Associate Judge : Petitioner Absalom I. Jordan, a customer and shareholder of Potomac Electric Power Co. (PEPCO), has asked this court to review two orders of the Public Service Commission (PSC or the Commission). In Order No. 9540, dated August 24, 1990, the Commission dismissed without a hearing Jordan's complaint that PEPCO had failed to comply with the federal Small Business Act, 15 U.S.C. §§ 631, 637 (c) (1992 Supp.). The Act requires certain contractors who deal with federal agencies to negotiate and implement subcontracting plans which promote the participation of socially and economically disadvantaged individuals, including blacks, Hispanics, and members of other racial and ethnic minority groups. In Order No. 9646, dated February 4, 1991, the Commission denied requests for reconsideration by the Minority Business Enterprise Legal Defense and Education Fund (MBELDEF) and by Kingwood Mining Company, a minority enterprise which had been embroiled in a separate controversy with PEPCO. The Commission held in the first of these orders and reiterated in the second that PEPCO was subject to the Small Business Act, but that no violation of the Act had occurred, that no remedial action was appropriate, and that the controversy was moot.

Before this court, Jordan contends that the complaint against PEPCO should not have been dismissed without a hearing and that the Commission applied incorrect legal standards. We vacate the Commission's order of dismissal and remand for further proceedings.

I.

THE PROCEEDINGS BEFORE THE COMMISSION

In 1978, Congress passed amendments to the Small Business Act which are now codified in 15 U.S.C. § 637 (c). *fn1 These amendments were predicated on Congressional recognition that members of certain racial and ethnic minorities were socially and economically disadvantaged because they had been subjected to racial or ethnic prejudice or to cultural bias, without regard to their individual qualities. § 637 (a) (5) and (6). The category of socially or economically disadvantaged individuals was presumed to include Black Americans and Hispanic Americans, as well as members of other minority groups. § 637 (c)(3). Congress declared it to be the policy of the United States that

small business concerns, and small business concerns owned and controlled by socially and economically disadvantaged individuals, shall have the maximum practical opportunity to participate in the performance of contracts let by any Federal agency.

§ 637 (c)(1).

To promote this policy, Congress required federal agencies to include in their contracts various provisions designed to improve the opportunities of members of racial and ethnic minorities and other disadvantaged persons to participate as subcontractors. See, e.g., § 637 (c)(2) and (3). Much of the legislation was aimed at the conduct of federal agencies.

The Small Business Act also imposes direct obligations upon prospective prime contractors. Section 637 (c)(4)(B) provides that, before a contract is awarded,

the apparent successful offeror shall negotiate with the procurement authority a subcontracting plan which incorporates the information prescribed in paragraph (6). The subcontracting plan shall be included in and made a material part of the contract.

The subcontracting plan must include, among other things, percentage goals for use as subcontractors of small business concerns, including enterprises owned and controlled by socially and economically disadvantaged individuals. See, e.g., § 637 (c)(6)(A).

In his complaint to the PSC, filed on May 25, 1989, Jordan claimed that PEPCO, a federal contractor, had violated the Act because it had failed to negotiate and to institute the required subcontracting plan. In his submissions to the Commission, Jordan alleged that, beginning approximately in 1980, the General Services Administration (GSA) had sought compliance by PEPCO, but that PEPCO had contended that its activities were not covered by the Act and had refused to comply with its provisions. In 1985, according to Jordan, GSA requested an opinion from the Department of Justice (DOJ) regarding PEPCO's claims of lack of coverage. In March, 1987, DOJ issued an opinion in which it concluded that the Act applies to PEPCO. Jordan alleged that in spite of the DOJ ruling, it was not until August 29, 1989, three months after he had filed his complaint with the Commission, that PEPCO signed a subcontracting plan as required by the Act. *fn2

The legal basis for Jordan's submission was D.C. Code § 43-503 (1990), which provides in pertinent part that

the Commission shall have power, after hearing and notice by order in writing, to require and compel every public utility to comply with the provisions of Chapters 1-10 of this title, and with all other laws of the United States applicable, and any municipal ordinance or regulation relating to said public utility . . . .

Jordan contends that § 637 (c) is a law of the United States applicable to PEPCO, and that the Commission therefore has the authority to compel PEPCO to comply with it.

In his initial complaint, Jordan alleged that PEPCO's violation of § 637 (c) had subjected the utility to potential liabilities, and he asked the Commission to require PEPCO to disclose these liabilities and to "make appropriate changes to PEPCO's rate base." In subsequent submissions, Jordan and MBELDEF requested additional affirmative relief. Specifically, they asked that the Commission require PEPCO, among other things:

1. to comply with § 637 (c) by "having an appropriate share of its business with minority contractors;"

2. to fund a study to determine the harm suffered by minority contractors as a result of PEPCO's noncompliance, and to determine the current availability of minority businesses capable of providing ...


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