Justices Hear Affirmative Action Challenge : Supreme Court: Federal law favoring minority contractors hangs in the balance. White contractor claims a ‘racial stereotype’ is fostered.

With the fate of federal affirmative action likely hanging in the balance, the Supreme Court on Tuesday heard two conflicting accounts of how those programs work in practice.

A lawyer for a white contractor said that federal law creates “an impermissible racial stereotype” in its contracting rules. All whites are penalized and all minority entrepreneurs are given an advantage solely because of their race or ethnic heritage, he said.

“All they do is step forward and prove their race,” Denver attorney William Perry Pendley said of the minority contractors.

But the Clinton Administration’s top courtroom lawyer said that federal law merely sets forth a “presumption” that blacks, Latinos, Asians and Native Americans have suffered an economic disadvantage because of their race and heritage. Minority entrepreneurs who are not “disadvantaged” are not entitled to preferences, U.S. Solicitor Drew S. Days III told the justices.

During the hourlong argument, the justices sounded sharply divided over whether Congress can continue to require that federal agencies employ racial and ethnic preferences in awarding billions of dollars in contracts.

A more liberal court has upheld such affirmative action programs in the past but the justices in September agreed to consider the white contractor’s claim that the Constitution demands a color-blind approach.

Since 1978, the Small Business Act has required all federal agencies to give at least 5% of their contract awards to small “disadvantaged enterprises.” Agencies “shall presume” that firms headed by blacks, Latinos, Asians or Native Americans are disadvantaged, the law says.

It also says whites who lose a contract because of this preference can challenge whether the minority entrepreneur is truly disadvantaged, but it is not clear how.

“As a practical matter, how can he challenge it?” O’Connor asked at one point. The federal regulations do not define when a minority contractor is no longer “disadvantaged.” They also say that no one will “investigate” minority individuals to check on their economic status.

When pressed, Days was forced to admit that he could not cite an example of when a white contractor was able to successfully challenge a minority businessman as not disadvantaged. A ruling in the case (Adarand Contractors vs. Pena, 93-1841) is due by July.

In a second case heard Tuesday, the justices signaled that, because of a procedural problem, they probably would dismiss a California welfare dispute.

Led by Gov. Pete Wilson, the state wants to temporarily pay lower welfare benefits to new residents of California. A federal judge had ruled the two-tiered system unconstitutional because it penalizes interstate migration. The high court had agreed in September to hear the state’s appeal.

But on Tuesday, the state’s hopes were dashed in the opening moments of the oral argument.

Justices Ruth Bader Ginsburg and David H. Souter noted that the state no longer has a federal waiver that would allow it to use the two-tiered system of benefits for old and new residents.

In 1992, officials of the George Bush Administration gave the state permission to go ahead with its change in welfare payments but the regulatory move was invalidated by a federal appeals court in July. And the Clinton Administration has yet to issue a new federal waiver. That means, even if the Supreme Court were to uphold California’s two-tiered approach, the state could not enforce its law.

Early next week, the justices could issue an order that dismisses the case (Anderson vs. Green, 94-197).

Why the court agreed to hear the state’s appeal is puzzling. In September, legal aid lawyers filed a brief in the case clearly stating that the matter was “moot” because of the invalidated federal waiver.

Also on Tuesday, the justices let stand the child pornography conviction of a Pennsylvania man who bought videos showing scantily clad young girls (Knox vs. United States, 94-413).

Last year, the case of Stephen Knox became a political embarrassment for the Clinton Administration. Conservatives charged the Administration’s lawyers with being “soft on pornography” because they filed a brief with the court asserting that the law punished only those who dealt in depictions of nude children, not those in which children posed in scanty attire. After the criticism, Clinton publicly repudiated that view.

But Congress resolved the dispute last year in the crime bill by making it clear that it is illegal to make, sell or own lewd photos of young children, even if they are clothed.