I. INTRODUCTION

Over the years, the Federal Government has established a large number of financial assistance programs to provide aid in meeting problems of national concern and to help achieve specific goals of national importance. Many of these programs are formulated to meet key social and economic problems of the American people; they involve such important aspects of life as education, health, food, housing, job training, business ownership, recreation, farm production, and economic development. They affect the lives of most Americans and are of particular importance to disadvantaged Americans, a disproportionately large number of whom are minority group members.

These programs take several forms. Some involve a direct relationship between the Federal Government and the intended beneficiaries, and the program benefits, in the form of payments, loans, subsidies, or technical assistance, flow directly from the Federal agency to the individual. Others involve one or more intermediaries-public or private institutions that intervene between the Federal Government and the intended beneficiaries-and the program benefits reach the individual beneficiary indirectly, through the intermediaries. In these indirect assistance programs, Federal aid often takes the form of cash disbursements-grants or loans-which go the intermediaries to be used for specified program purposes. In other cases cash disbursements are not involved. Rather, the Federal Government assumes the role of underwriter, seeking to use the ordinary channels of the private credit industry for nationally desirable ends, by insuring or guaranteeing loans for particular purposes.

With respect to all of these Federal assist

ance programs, direct and indirect, the Federal Government has an obligation to assure that program benefits reach intended beneficiaries on an equitable and nondiscriminatory basis. Indeed, if inequity or discrimination are permitted to persist, the programs necessarily are prevented from accomplishing their goals. For example, "a decent home and a suitable living environment for every American family," which is the goal of Federal housing programs, cannot be achieved so long as American families are denied the benefits of these programs because of their race or national origin. By the same token, the goal of quality education for every American child, which guides Federal education programs, cannot be

achieved so long as school facilities and services provided under these programs are distributed inequitably and, above all, so long as children are educated in racially and ethnically isolated schools.

The Federal Government in one form or another, has, in fact, explicitly recognized its obligation to assure against discrimination with respect to all its programs. In direct assistance programs, the courts have made this obligation clear as a constitutional mandate. In programs of insurance and guaranty, executive action by the President, as well as judicial decisions, established this policy. And in programs involving grants or loans to intermediaries, Congress, as well as the judicial and executive branches, has spoken. Although the Federal responsibility to prevent discrimination has thus been recognized, the way in which that responsibility is being carried out by Federal departments and agencies is far from satisfactory.

This chapter will analyze the mechanisms and procedures that have been developed to

prevent discrimination in the three forms of Federal programs discussed above:

1. Grants or loans to intermediaries.

2. Insurance or guaranty of loans by private credit institutions.

3. Direct assistance programs.

The bulk of the chapter is devoted to grant or loan programs that flow through intermediaries to the benefit of intended beneficiaries. These are the programs in which Federal money is funneled through non-Federal agenciespublic and private for social and economic welfare purposes. These are the programs in which discrimination most frequently has come to prominent public attention.1 These are the programs concerning which Congress, in Title VI of the Civil Rights Act of 1964, has set forth guidelines for ending discrimination based on race, color, or national origin. Thus, in these programs—unlike direct assistance or insurance and guaranty programs-Federal agencies have been under a statutory mandate to end discriminatory practices. To carry out this congressional mandate, Federal agencies have developed detailed mechanisms and procedures.

II. TITLE VI AND FEDERALLY ASSISTED PROGRAMS

A. Introduction

Of the 11 titles contained in the memorable Civil Rights Act of 1964 which was signed into law on July 2, 1964, one of the most significant is Title VI, concerned with nondiscrimination in federally assisted programs. The title states the following broad and unequivocal prohibition against discrimination:

No 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.'

Other provisions of Title VI, dealing with the implementation of the law, limit coverage to programs or activities receiving Federal financial assistance "by way of grant, loan, or con

1U.S. Commission on Civil Rights, staff report, Food Programs in Texas (1969); U.S. Commission on Civil Rights, Children in Need (1969); U.S. Commission on Civil Rights, Equal Opportunity in Farm Programs (1965).

'Civil Rights Act of 1964, sec. 601.

tract other than a contract of insurance or guaranty." ." Thus, Title VI applies mainly to Federal loan and grant programs. Although these Title VI programs differ widely in their purposes and functions, they have one significant element in common. They operate through intermediaries, called "recipients." The loans and grants are made to recipients, not to intended beneficiaries. Frequently, these recipients are State agencies. For example, under HEW's Aid to Families with Dependent Children program, recipients of Federal grants are State welfare agencies. Under the Department of Justice's Law Enforcement Assistance Program, recipients of Federal grants are State or local law enforcement agencies. Under HUD's Low-Rent Public Housing Program, recipients of Federal loans and annual contributions are local housing authorities, which are State agencies. Sometimes, recipients are private entities. For example, under the Commerce Department's Economic Development Program, recipients of grants or loans may be private nonprofit organizations representing a development area. Under HUD's Rent Supplement Program, recipients may be private nonprofit or limited dividend housing sponsors.

A 1969 study showed that in fiscal year 1968 Federal grant-in-aid payments under these programs amounted to more than $25 billion. The bulk of this money, $18 billion, went to State and local governments. Estimates are that Federal assistance will exceed $30 billion in fiscal year 1970.5

'Civil Rights Act of 1964, sec. 602.

4

The Department of Health, Education, and Welfare's Title VI regulations define recipients as:

"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, assignee or transferee thereof, but such term does not include any ultimate beneficiary under any such programs. 45 CFR 80.13(i).

In each of these programs, key decisions on how the program operates and how program benefits are distributed are made by recipients. Despite detailed Federal guidelines on program operation typically contained in the governing legislation and administrative regulations, recipients often have wide discretion in operating the program, and opportunities are presented to discriminate or otherwise deny program benefits to intended beneficiaries. For example, officials of State welfare agencies may require minority group families to meet stricter standards of eligibility than majority group families must meet and may force them to accept demeaning employment as a condition to remaining on the welfare rolls. Officials of State employment offices which receive funds from the Department of Labor may refer minority group applicants only to low-paying, low-skilled jobs even though they are qualified for better jobs.

Officials of the Cooperative Extension Service, which is funded jointly by Federal, State, and county sources, may provide technical and other assistance to black farmers of a lesser quality than provided to whites. Local housing authority officials may select sites for public housing projects and adopt tenant assignment policies that assure against racially integrated projects and promote residential segregation.

These are just a few examples of the kinds of discriminatory practices in which recipients under federally assisted programs can engage in administering the programs. They are by no means hypothetical examples. Title VI was enacted to eliminate these practices and to prevent their recurrence."

practices; vocational rehabilitation; child care; business development and area redevelopment; and other programs. Public assistance payments and grants for highway construction, maintenance and related activities were the largest Federal assistance categories. 'For examples of continuing discrimination under a variety of Title VI programs, see chapter 1 supra. 'During congressional consideration of the act, the thrust of Title VI was enunciated by Congressman Emanuel Celler who said, "It seems rather anomalous that the Federal Government should aid and abet discrimination on the basis of race, color, or national origin by granting money and other kinds of financial aid." 110 Cong. Rec. 2467 (1964).

B. Scope and Coverage of Title VI Title VI provides a good deal of detail on the procedures to be followed in securing compliance with its requirement of nondiscrimination. These provisions concerning procedure are aimed primarily at assuring protection to recipients against precipitous and ill-advised actions by Federal departments and agencies. Concerning the scope and coverage of Title VI, however, the legislation, aside from two specific restrictions on coverage," offers only general guidance on its substance. Title VI delegates much of this responsibility to Federal departments and agencies. Section 602 of the title directs each Federal department and agency that extends Federal financial assistance to issue rules, regulations, or orders of general applicability to put into effect the provisions of the statute. In large part, the substance of Title VI has developed through agency regulations.

1. REGULATIONS

In enacting Title VI, Congress intended that, to the extent possible, Federal agencies would adopt uniform regulations.10 In the months immediately following enactment of Title VI, a task force, composed of representatives of the White House, the Commission on Civil Rights, the Department of Justice, and the Bureau of the Budget, worked with representatives of the Department of Health, Education, and Welfare to develop regulations for that agency. HEW regulations then were used as a model which other agencies adapted to their own programs.

In all, 22 Federal departments and agencies have issued Title VI regulations since the enactment of the Civil Rights Act of 1964.11

Nevertheless, as of May 1970, several agencies that operate programs subject to Title VI had not yet issued such regulations. For example, Title VI regulations for the Department of Transportation, which was established in October 1966 and which in fiscal year 1970 provided approximately $6.1 billion to 1,682 recipients covered by Title VI,12 were not submitted for Presidential approval until January 17, 1969, 3 days before President Johnson left office. The regulations, which have since been revised, were not approved until June 1970.13

The National Foundation on the Arts and the Humanities is another agency with Title VI programs which has not issued corresponding regulations. In 1968, proposed regulations were submitted to the Department of Justice for review. These regulations also were submitted to the President on January 17, 1969, along with Transportation's regulations. The President did not act on them and the Foundation has continued to operate without Title VI regulations despite the fact that it is retransfer to the Department of Transportation); General Services Administration; Department of Health, Education, and Welfare; Department of Housing and Urban Development; Department of Interior; Department of Justice (covering the Law Enforcement Assistance Administration); Department of Labor; National Aeronautics and Space Administration; National Science Foundation; Office of Economic Opportunity; Office of Emergency Preparedness; Small Business Administration; State Department; Tennessee Valley Authority; Treasury Department (covering the Coast Guard before its transfer to the Department of Transportation); and Veterans Administration.

With the exception of the Department of Justice, the Title VI regulations of all the issuing agencies were approved in either December 1964 or January 1965.

12

Letter from John A. Volpe, Secretary of Transportation, to the Reverend Theodore M. Hesburgh, C.S.C. Chairman, U.S. Commission on Civil Rights, Aug. 13, 1970. Estimates of Department of Transportation expenditures (covered by Title VI) in fiscal year 1969 are about $5 billion; most of the funds are authorized under the Federal Aid Highways Program which alone exceeds $4 billion. Letter from Richard F. Lally, Director of Civil Rights, Department of Transportation, to Martin E. Sloane, Assistant Staff Director, U.S. Commission on Civil Rights, Jan. 23, 1970.

"See 35 Fed. Reg. 10080 (June 18, 1970). Prior to this, four of the Department of Transportation's operating administrations, Coast Guard, Federal Aviation Administration, Federal Highway Administration, and Urban Mass Transportation Administration, continued to operate pursuant to the regulations issued by the agencies from which they were transferred.

sponsible for administering a number of federally assisted programs." The Equal Employment Opportunity Commission's (EEOC) program of assistance grants to State and local fair employment agencies to aid them in eliminating discriminatory employment practices 15 appears to fall within the purview of Title VI. But, EEOC has not issued Title VI regulations. According to one EEOC official, until the Commission on Civil Rights staff raised the issue, the question of whether its grant program was subject to Title VI had never been considered. 16 The official indicated that he would seek an opinion from EEOC's General Counsel. As of June 1970, however, the issue had not been resolved.17

In July 1967, an interagency committee, with the Department of Justice acting as Chairman, was formed to consider the adoption of uniform amendments to agencies' Title VI regulations. By that time, agencies had had the benefit of nearly 3 years' experience since the adoption of their original regulations. As a result of this experience and certain administrative changes that had occurred, there was a general recognition that the regulations needed to be brought up to date. 18

The proposed uniform amendments contained many substantive provisions that had not appeared in the original regulations.19 Agencies proceeded to redraft their respective Title VI regulations to conform to the uniform amendment proposals. Like the regulations of the Department of Transportation and the Na

tional Foundation on the Arts and the Humanities, however, they were not submitted for Presidential approval until the last days of the outgoing Johnson Administration and were not approved.

The proposed Department of Transportation Title VI regulations incorporated most of the provisions suggested in 1967 by the Uniform Amendments Committee. These regulations, which were revised after original submission to President Johnson, were resubmitted for Presidential approval in April 1970 20 and approved in June 1970. Other agencies' Title VI regulations undoubtedly will be revised accordingly and resubmitted for Presidential approval.

2. DEFINING KEY TERMS

There are several key terms mentioned in Title VI that determine, in large part, the scope of coverage under the law. One is "discrimination"; another is "Federal financial assistance"; and another is "program or activity". These terms are not defined in the statute. Rather, the definition of these terms has been developed through agency regulations and interpretations. Although the Title VI regulations of Federal departments and agents are similar, each agency determines for itself the definition of these terms as applied to its own programs. Thus, the distinct possibility for inconsistency is presented in program coverage. In actual fact, a good deal of uniformity has been achieved, although in some cases inconsistencies persist.

a. "Discrimination"

Despite the lack of statutory guidance on the definition of the term "discrimination", agency regulations uniformly have spelled out specific practices that fall within the meaning of the term and are thereby prohibited. These include the following:

• Segregation or separate treatment in any part of the program;

• Any difference in quality, quantity, or the manner in which the benefit is provided;

• Standards or requirements for participation which have as their purpose or which have the effect of excluding

" Memorandum for the President from the Attorney General, Apr. 14, 1970.

members of certain racial or ethnic minorities;

• Methods of administration which would defeat or substantially impair the accomplishment of the program objectives;

• Discrimination in any activity conducted in a facility built in whole or in part with Federal funds;

• Construction of a facility in a location with the purpose or effect of excluding individuals from the benefits of any program on the grounds of race, color, or national origin;

• Discrimination in any employment resulting from a program established primarily to provide employment; and

• Discrimination in employment practices which has the effect of denying equality of opportunity to beneficiaries of the program.21

b. "Federal Financial Assistance"

"Federal financial assistance" is not defined in Title VI other than in terms of the means by which it is provided-"by way of grant, loan, or contract other than a contract of insurance or guaranty."

The legislative history of Title VI supports the view that Congress intended the term to be construed broadly.22 In fact, agency regulations generally have reflected a broad interpretation of this term. It generally has been defined to include:

(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

21

"1 See, e.g., 7 C.F.R. 15.3 (Agriculture); 15 C.F.R. 8.4 (Commerce); 45 C.F.R. 80.3 (HEW); 45 C.F.R. 1010.4 (OEO); 13 C.F.R. 112.3–112.7 (SBA). With respect to some issues concerning the meaning of "discrimination," there is no uniformity. For example, some agencies consider site selection to be within the ambit of the term (e.g., DOT, HUD). Some do not.

"See, e.g., 110 Cong. Rec. 2467 (1964) in which Representative Celler, Chairman of the House Judiciary Committee and one of the chief spokesmen for Title VI in Congress, spoke of "granting money and other kinds of financial aid." (Emphasis added.)