To use this site, please disable the ad blocking feature and reload the page.
This website uses cookies to collect information about your visit for purposes such as showing you personalized ads and content, and analyzing our website traffic. By clicking “Accept all,” you will allow the use of these cookies.
Users accessing this site from EEA countries and UK are unable to view this site without your consent. We apologize for any inconvenience caused.
A federal judge in Texas has ordered a 55-year-old federal agency created to help minority-owned businesses to open its doors to all races, a ruling that potentially imperils dozens of government programs that also presume racial minorities are inherently disadvantaged.
In a 93-page opinion rendered Tuesday, U.S. District Court Judge Mark T. Pittman ruled that the Minority Business Development Agency’s presumption that businesses owned by Blacks, Latinos and other minorities are disadvantaged violated the Constitution’s guarantee of equal protection. He permanently enjoined the agency’s business centers, which have assisted minority-owned businesses in accessing capital and government contracts, from extending services based on an applicant’s race.
“If courts mean what they say when they ascribe supreme importance to constitutional rights, the federal government may not flagrantly violate such rights with impunity. The MBDA has done so for years. Time’s up,” wrote Pittman, who was appointed to the bench by President Donald Trump in 2019.
The decision marks the latest blow to government affirmative action programs in the wake of the Supreme Court’s landmark rulings against Harvard and the University of North Carolina last June. The high court’s finding upended race-conscious college admissions and sparked a broad legal offensive against affirmative action and diversity, equity and inclusion (DEI) programs in the private and public sectors. Within weeks, a federal judge in Tennessee struck down a provision of the Small Business Administration’s 8(a) Business Development program that equated race with social disadvantage as unconstitutional, forcing the agency to overhaul it.
Legal experts said Tuesday’s ruling could have even more profound implications for how the government provides aid to historically disadvantaged groups.
“If this holding withstands appeal, it would immediately disqualify any federal program that operates on a presumption that people of color are socially disadvantaged,” said Noah Feldman, a constitutional scholar at Harvard Law School.
He added that, were the case to withstand appeal, “it would be part of an unsurprising trend in the aftermath of [the Harvard-UNC case], in which the conservative-leaning courts are chipping away at and … sometimes actually removing the foundation stones of remediation-based affirmative action.”
Dan Lennington, an attorney with Wisconsin Institute for Law & Liberty, the conservative public interest law firm representing the plaintiffs in the MBDA case, called the ruling a “historic victory for equality in America.”
“No longer can a federal agency cater only to certain races,” he said. “MBDA is now open to all.”
Justice Department lawyers representing the MBDA did not respond to a request for comment Wednesday. Neither did the Commerce Department, which runs the agency. Unless they appeal, the agency would be forced to immediately cease using an applicant’s race or ethnicity in determining eligibility for the program, according to Pittman’s order.
Lennington expects the case to be appealed to the U.S. Court of Appeals for the 5th Circuit, which has a conservative majority. He estimated that the presumption of disadvantage “is used by dozens of other agencies in many programs worth billions” of dollars, making the ruling a likely focus of further judicial review.
Pittman has emerged as a consistent conservative voice on a range of politically volatile issues. In November 2022, he struck down President Biden’s student loan forgiveness program. Months earlier, he set aside a Texas law barring adults younger than 21 from carrying handguns after concluding that age restrictions violated the Second Amendment right to bear arms.
In the MBDA case, Pittman blasted the agency’s use of broad racial categories to assist businesses owned by people of color. He said the agency places extra barriers on White business owners, a dynamic he likened to discrimination faced by Irish people in the 19th century and Black people during the Jim Crow era.
Ultimately, he found the MBDA’s use of racial categories did not survive “strict scrutiny” – a rigorous legal test courts use to determine whether government race-based affirmative action programs are constitutional – dismissing government evidence that minority businesses have far less access to credit than their White counterparts. Even if true, he asserted, it would not justify the government offering services to some races and not others.
Moreover, Pittman wrote, the agency’s use of racial categories is imprecise and unfairly stereotypes certain races as being disadvantaged.
Under the law, “Oprah Winfrey is presumptively disadvantaged, while Plaintiffs and even more disadvantaged Americans are not,” Pittman wrote. “While illogical, this wouldn’t be a problem if the presumption wasn’t based on race.”
The opinion cited the Supreme Court’s Harvard-UNC decision more than 30 times – a sign that the ruling’s influence is extending beyond academia. “Though SFFA concerned college admissions, nothing in the decision indicates the Court’s holding should be constrained to that context,” Pittman wrote.
Feldman, the Harvard professor, said Tuesday’s ruling followed the “logical style” and the “music” of the Harvard-UNC decision, in applying an “extremely rigorous set of strict scrutiny standards that are overwhelmingly difficult to overcome in the real world.”
Devon Westhill, president and general counsel at the Center for Equal Opportunity, a conservative think tank, said that cases like this represent the “next battlefield” when it comes to federal programs that make decisions based on race.
He expects that the MBDA ruling, taken in tandem with the recent SBA 8(a) decision, will accelerate a shift away from explicit references to race to qualify for certain federal programs and doing away with the government’s presumption of disadvantage.
“We should probably see a whole host of other federal programs beginning to make that shift that the 8(a) program did,” Westhill said. But he noted that such adaptation could be challenging for a government agency whose explicit purpose is to foster minority business development.
“There’s certainly nothing wrong with helping minorities in a broad sense,” Westhill said. “But if you are targeting some people for help and disadvantaging other people because of their race, that is always going to be against the law.”
On Wednesday, congressional Democrats, affirmative action proponents and minority business advocates condemned the decision, saying it would harm minority businesses and the overall economy.
“To say that I am disappointed in the Texas court decision regarding MBDA programs would be a grave understatement,” said Sen. Ben Cardin (D-Md.), who led efforts to make the MBDA permanent in 2021. “Along with constitutional experts, I am still reviewing the finer details of the court decision, but what I do know is that MBDA programs to support minority communities throughout rural, urban and suburban America must continue.”
“We cannot allow this court ruling to reverse this progress,” he added. “I will continue to fight to preserve programs that address historic discrimination and uplift our minority communities.”
The MBDA was established by executive order in 1969 by President Richard M. Nixon and made permanent in 2021 under the Infrastructure Investment and Jobs Act, which greatly increased its funding to $550 million over five years. It runs more than three dozen centers across the country that help minority-owned businesses secure financing and navigate the federal contracting process.
In fiscal 2022, MBDA clients secured $1.6 billion in private and government contracts, agency data show. The agency also helped businesses raise $1.2 billion in capital, as well as create or retain roughly 16,000 jobs. Black-owned businesses received $680 million in contracts, the most of any group, followed by Hispanic-owned businesses at $526 million.
Rep. Judy Chu (D-Calif.), chair of the Congressional Asian Pacific American Caucus, also condemned the decision as “the next step in the far-right’s strategy of using the judicial system to terminate federal efforts that strengthen opportunities for people of color and underserved communities to achieve their American Dreams.”
Alphonso David, a civil rights lawyer and chief executive of the Global Black Economic Forum, said he disagrees with the court’s choice to “enjoin the remedy” to correct “historical discrimination faced by marginalized communities.”
These communities “continue to confront blatant bias and discrimination in contracting,” David said.
David also cautioned against any effort to interpret the decision about a single federal agency as being broadly applicable to all federal programs that consider race or to voluntary private programs.
“Right-wing advocates will attempt to paint this decision with a broad brush to suggest it prohibits any public or private program that seeks to remedy past discrimination,” David said. “It does not.”
