USDOL/OALJ Reporter
87s27_00.ofc
DATE: March 16, 1995
CASE NO. 87-OFC-27
IN THE MATTER OF
OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS,
U.S. DEPARTMENT OF LABOR,
PLAINTIFF,
v.
USAA FEDERAL SAVINGS BANK,
DEFENDANT,
BEFORE: THE SECRETARY OF LABOR
FINAL DECISION AND ORDER
This case arises pursuant to an attempted review by the
Office of Federal Contract Compliance Programs (OFCCP) of USAA
Federal Savings Bank (USAA) under Executive Order No. 11,246
(E. O. 11,246). In 1986 USAA refused to submit its affirmative
action program (AAP) for review or to permit OFCCP to conduct a
compliance review. USAA asserts that it is not a covered
government contractor subject to such a review. OFCCP asserts
that USAA is covered by E. O. 11,246 because of the contractual
relationship between USAA and the Federal Savings and Loan
Insurance Corporation (FSLIC) [1] for the insurance of deposits.
The ALJ dismissed the complaint holding that FSLIC insurance was
not a covered government contract. I agree with the ALJ that the
complaint should be dismissed, but do so on other grounds, as set
out below. [2]
DISCUSSION
Final regulations implementing E.O. 11,246 published in May
1968 defined "Government contract," as follows:
any agreement or modification thereof between any
contracting agency and any person for the furnishing of
supplies or services or for the use of rail [sic] or
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personal property, including lease arrangements. The term
"services," as used in this section includes . . . the following
services: Utility, construction, transportation, research,
insurance, and fund depositary [sic] . . . .
33 Fed. Reg. 7804 (1968) (emphasis added). Neither the preamble
to the final rule nor the proposed rule explain the term
"insurance."
In a 1971 letter to the Department of the Treasury, OFCCP
took the position that federal share and deposit insurance
constitutes a government contract for purposes of E.O. 11,246.
The Solicitor of Labor reiterated that position in a 1972 letter
to the General Counsel of the Federal Home Loan Bank Board
(FHLBB) which supervised the FSLIC. Both letters stated that:
[t]he contracts entered into by the [FSLIC] . . . with
various savings and loan associations . . . are service
contracts providing for insurance, and therefore, a
Government contract as contemplated by the definition . . .
in [41 C.F.R.] § 60-1.3(m).
The FHLBB amended its regulations in 1973 to provide that
the equal opportunity clause contained in section 202 of E.O.
11,246 "shall be deemed to be incorporated in each . . . contract
of insurance." In addition, the FHLBB regulations provided that
"[i]n the event of an insured institution's noncompliance with
the provisions of the Equal Employment Opportunity Clause [sic]
. . . such institution shall be subject to the sanctions and
remedies as may be appropriate under the Executive Order or any
other law, rule, regulation, or order." 12 C.F.R. §
563.36(c) (1974).
I find that USAA was covered by the then existing FHLBB
regulations and therefore it is not necessary for me to decide
whether federal share and deposit insurance is a "contract"
covered by E.O. 11,246. Even if the FHLBB was not required to
include the requirements of Executive Order No. 11,246 in its
agreements, it had the authority to apply those requirements to
insured institutions under the Home Owners Loan Act. 12 U.S.C.
§ 1725 (1988) (FSLIC operates under direction of FHLBB and
under "such bylaws, rules, and regulations as [the FHLBB] may
prescribe for carrying out the purposes" of the Act.)
In a similar situation, the Comptroller General ruled in
1961 that the Office of the Architect of the Capitol may include
the equal opportunity clause in its contracts, although not
required to do so because it is a legislative, not an executive
agency. 40 Comp. Gen. Dec. 592, 594 [B-145475] (1961). See
also Padula v. Webster, 822 F.2d 97, 100 (D.C. Cir.
1987) ("[A]n
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agency . . . must adhere to voluntarily adopted, binding policies
that limit its discretion."); Rodway v. United States Dep't of
Agriculture, 514 F.2d 809, 814 (D.C. Cir. 1975) (voluntary
adoption of APA rule making requirements binds agency).
Therefore, all FSLIC-insured institutions were required, by the
force of the FHLBB regulations, to comply with the requirements
of E. O. 11,246 and its implementing regulations.
The ALJ dismissed the FHLBB regulation as having been
promulgated by the Board "only because it considered itself
compelled to do so by the Solicitor of Labor's determination that
FSLIC insurance of accounts was a 'government contract' under the
Executive Order." R. D. and O. at 12. However, if the
regulation was properly promulgated and within the FHLBB's
authority, it had the force and effect of law, until it was
repealed. Courts may not inquire into a legislature's (or
agency's) purpose or motives for enacting a statute or issuing a
regulation. United States v. O'Brien, 391 U.S. 367, 383
(1968).
Little purpose would be served, however, by ordering USAA to
comply with the 1986 request for its AAP, a document based on 10-
year-old data establishing objectives for 1986. It would be
incongruous to require USAA to submit a current AAP when there is
a serious question whether it is now covered by the Executive
Order. [3] If USAA refused to comply, OFCCP concedes that
termination of deposit insurance would not be appropriate (OFCCP
Exceptions to ALJ Recommended Decision and Order at 81), and the
parties have stipulated that USAA holds no other government
contracts. I find, therefore, that enforcement of this matter is
moot and accordingly the complaint is DISMISSED.
SO ORDERED.
_________________________
Secretary of Labor
Washington, D.C.
[ENDNOTES]
[1] The FSLIC was abolished in August 1989 by the Financial
Institutions Reform, Recovery and Enforcement Act of
1989 (FIRREA).
[2] The Indiana League of Savings Institutions moved for leave
to file a brief amicus curiae. That motion was granted
and the brief has been made part of the record.
[3] The FDIC repealed the FHLBB regulation on Equal Opportunity
in Employment after the FHLBB and the FSLIC were abolished by the
FIRREA. 55 Fed. Reg. 46,495 (1990).
