A federal judge in Texas has ordered a 55-year-old US agency that caters to minority-owned businesses to serve people regardless of race, siding with business owners who said that the program was discriminatory.
Judge Mark Pittman of the US District Court of the Northern District of Texas ruled that the Minority Business Development Agency’s (MBDA) eligibility parameters violated the equal protection guarantees of the Fifth Amendment of the US constitution because they presume that racial minorities are inherently disadvantaged.
The agency, which is part of the US Department of Commerce, was established to address discrimination in the business world.
Photo: AP
The administration of US President Joe Biden widened its scope and reach through the Infrastructure Investment and Jobs Act in 2021, making it a permanent agency and increasing its funding to $US550 million over five years.
It operates in 33 states and Puerto Rico.
In a 93-page ruling, Pittman said that while the agency’s work might be intended to “alleviate opportunity gaps” faced by minority-owned businesses, “two wrongs don’t make a right. And the MBDA’s racial presumption is a wrong.”
Pittman ruled that while the agency technically caters to any business that can show their “social or economic disadvantage,” people not on the “list of preferred races” must overcome a presumption that they are not disadvantaged.
The agency has been using the “unconstitutional presumption” for “55 years too many,” he wrote. “Today the clock runs out.”
Dan Lennington, deputy counsel at the Wisconsin Institute for Law & Liberty, which filed the lawsuit, said called it “a historic” victory that could affect dozens of similar federal, local and state government programs, which also consider people of some races inherently disadvantaged.
The ruling would pave the way for his and other groups to target those programs, Lennington said.
“We just think that this decision is going to be applied far and wide to hundreds of programs using identical language,” he said.
US Department of Justice lawyers representing the MBDA declined to comment on the ruling, which can be appealed to the 5th US Circuit of Appeals in New Orleans, Louisiana.
In court filings, the department cited congressional research showing that minority business owners face systemic barriers, including being denied loans at a rate three times higher than other firms, often receiving smaller loans and being charged higher interest rates.
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