The Minority Business Development Agency, a Commerce Department program created during the Nixon administration to help minority-owned businesses, discriminates against white people and must offer its services to people of all races and ethnic groups, a federal judge in Texas ruled on Wednesday.
The judge, Mark T. Pittman of the U.S. District Court for the Northern District of Texas, sided with two of the three white business owners who sued the agency after they were told its assistance was limited to members of “disadvantaged” minority groups. The third was found to not have standing.
The presumption that the business owners were not disadvantaged violated the 14th Amendment’s guarantee of equal protection under the law, wrote Judge Pittman, who was named to the federal bench by President Donald J. Trump. Judge Pittman permanently barred the agency from serving only members of minority groups.
“If courts mean what they say when they ascribe supreme importance to constitutional rights, the federal government may not violate such rights with impunity,” he wrote. “Time’s up.”
The ruling was the latest in a string of court decisions that have eroded or struck down federal affirmative-action mandates in a variety of arenas. The most prominent example was a Supreme Court ruling last June that upended race-conscious college admissions programs at Harvard and the University of North Carolina.
The three plaintiffs who sued the Commerce agency based their legal argument on that ruling, and Judge Pittman referred to it 32 times in his opinion.
The Department of Justice, which represented the agency in the suit, declined to comment on the ruling.
Marc H. Morial, the president and chief executive officer of the National Urban League, called for an immediate appeal.
“The decision is wrong and stands for a narrow retrogressive view of the Constitution,” he said. He added that the agency’s work “to concentrate on the growth of businesses that still remain substantially locked out of the mainstream of the American economy is necessary and needed.”
But the principal lawyer representing the plaintiffs, Dan Lennington of the Wisconsin Institute for Law and Liberty, a conservative public-interest law firm, said the ruling should also be applied to other race-conscious practices, like the awarding of grants, workplace promotions and race-based scholarships in higher education.
“We hope this is a precedent to eliminate all of that,” Mr. Lennington said. Automatically labeling a group of people as disadvantaged is “ridiculous,” he said, citing Judge Pittman’s reasoning that Oprah Winfrey would qualify as disadvantaged under the Commerce agency’s rules.
With a $550 million annual budget, the Minority Business Development Agency funds privately operated business centers in 33 states and Puerto Rico that help companies secure financial aid and strategic advice. The case involved three small businesses — a Texas chain of sexual wellness centers, a Florida contractor and a Wisconsin architect — whose owners, all of them white, separately sought help from the agency’s business centers.
The Texas and Florida business owners were told that they could not apply for help because the centers’ services were available only to disadvantaged individuals. (The Wisconsin business owner abandoned plans to seek help after discovering on the agency’s website that he, too, was ineligible because of his race.)
The law governing the agency’s operations defines disadvantaged people as members of specific minority groups, including African Americans, Hispanic persons and Native Americans, as well as anyone else whose business operations are hampered by prejudice against a group. Disadvantaged people must own more than half of a business to qualify.
The white business owners argued in their lawsuit that basing eligibility for the agency’s help on an applicant’s race or ethnicity was unconstitutional. In his opinion, Judge Pittman allowed that discrimination remains a troubling reality, citing evidence from the case that minority business owners “have less access to loans, get less money when they apply, and have to pay more for it.” And he noted that decades of legal precedent had in fact stated that it was sometimes necessary to take race into account “in order to remedy the effects of prior discrimination.”
But he said that was at odds with Congress’ intent when it drafted the 14th Amendment, citing historical records that said its drafters demanded “the abolition of all distinctions founded on color and race.”
“There is no escaping this tension,” he wrote. “Given its drafters’ desire to eschew race-based discrimination, even benign discrimination cannot be squared with the Equal Protection Clause.” And he said the government had failed to offer specific instances of intentional discrimination that might have justified some exception to that tenet.
Judge Pittman, who was confirmed to the federal bench in 2019, had previously been appointed to a state appeals court post by Gov. Greg Abbott, Republican of Texas. His most notable federal decisions, in 2022, outlawed President Biden’s student loan forgiveness program and overturned a Texas law that had barred people age 18 to 20 from carrying concealed handguns.
Although the ruling could dilute the agency’s ability to assist minority-owned businesses, the hurdles they face aren’t going away, said Sarah Hinger, a senior staff attorney with the American Civil Liberties Union Racial Justice Program.
“The circumstances facing minority business owners don’t change regardless of what happened in this court case,” she said. “They continue to face a legacy of discrimination and disadvantage.”
Source Agencies
