May 4, 2020 2:09PM

Oracle Tries to Escape a Kafkaesque Government Agency

Administrative agencies don’t materialize from thin air. All agencies exercise regulatory authority only to the extent empowered by an act of Congress or the Constitution itself.

Yet for decades, the Labor Department’s Office of Federal Contract Compliance Programs (OFCCP) has operated a comprehensive enforcement regime, without any basis in the law.

It started in 1965, when President Lyndon Johnson ordered that all government contracts include a set of anti‐​discrimination provisions—collectively, an equal‐​opportunity clause. Since then, the OFCCP leveraged this tenuous foundation into a full‐​blown regulatory scheme, complete with the power to award monetary damages.

In recent years, OFCCP has wielded its power in increasingly aggressive ways. For example, the agency’s onerous and burdensome demands for information often exceed the value of the underlying government contract. Given the absence of statutory constraints—OFCCP is making this up as it goes along—the agency’s evident overreach is perhaps unsurprising.

In the third‐​to‐​last day of the Obama administration, OFCCP filed a bizarre complaint against Oracle, claiming that the company owed $400 million for assorted racial discrimination. The agency lacked a single employee complaint or lawsuit.

Three years later, Oracle is still fighting the charges in OFCCP’s Kafkaeque program. Enough is enough.

Oracle recently sued in a federal district court, arguing that the entire scheme is beyond the law. On Friday, Cato joined an amicus brief submitted in support of Oracle. The brief is also joined by the U.S. Chamber of Commerce and National Federation of Independent Business—it’s rare when big and small business get together on something—and Washington Legal Foundation. We argue that (1) OFCCP’s scheme is far beyond any statutory authority, and (2) striking it down wouldn’t undermine enforcement of anti‐​discrimination laws.