## Facts

- Section 503 of the Rehabilitation Act requires covered federal contracts to include a clause obligating contractors to take “affirmative action” to employ and advance qualified individuals with disabilities.
- The Department of Labor, through the Office of Federal Contract Compliance Programs (OFCCP), revised its Section 503 regulations after concluding prior rules were not sufficiently improving employment outcomes for individuals with disabilities.
- The revised “Final Rule” required contractors to invite disability self-identification from all job applicants (not only post-offer individuals) and to analyze the resulting data.
- The Final Rule also established a nationwide “utilization goal” as a benchmark target for the employment of individuals with disabilities, derived from labor-force statistics and adjusted for a “discouraged worker” effect; it was framed as a goal rather than a quota.
- Associated Builders and Contractors, Inc. (a trade association whose members include covered federal contractors) sued federal labor officials, arguing the Final Rule exceeded statutory authority and was arbitrary and capricious under the Administrative Procedure Act (APA).
- The district court upheld the Final Rule, and ABC appealed.

## Issues

1. Whether Section 503 authorizes the Department of Labor to require contractors to invite disability self-identification from job applicants and to analyze those data as part of “affirmative action.”
2. Whether Section 503 authorizes the Department of Labor to adopt a nationwide utilization goal as a benchmark for disability employment in contractor workforces.
3. Whether the applicant self-identification requirement and utilization goal are arbitrary and capricious under the APA, including as applied to the construction industry.

## Decision

- The D.C. Circuit affirmed the district court’s judgment upholding the Final Rule.
- Applying Chevron, the court held the regulations were within the Department of Labor’s statutory authority under Section 503.
- The court held the rulemaking reflected reasoned decision-making and was not arbitrary or capricious under the APA.

## Legal Principles

- When a statute uses broad terms such as “affirmative action” and does not confine implementation to a specific employment stage, an agency may reasonably interpret the mandate to include pre-hire measures that support employment outcomes.
- Under Chevron, courts defer to an agency’s reasonable interpretation of an ambiguous or broad statutory delegation when the interpretation fits the statute’s text and purpose.
- An agency may require regulated entities to collect and analyze applicant-flow data as a means of assessing barriers and measuring progress toward statutory employment objectives.
- A utilization goal may be upheld as a permissible benchmark (rather than an unlawful quota) when it functions as an evaluative target and is supported by an explained methodology.
- Under APA arbitrary-and-capricious review, a rule is sustained when the agency identifies the problem, considers relevant comments and data, and explains the connection between the evidence and the chosen regulatory approach.

## Conclusion

The D.C. Circuit upheld Labor’s revised Section 503 regulations, concluding that requiring disability self-identification from job applicants and adopting a nonbinding utilization goal were reasonable exercises of delegated authority and supported by an adequate explanation under the APA.


Associated Builders & Contractors, Inc. v. Shiu, 773 F.3d 257 (D.C. Cir. 2014)