{"id":27096,"date":"2024-03-07T14:32:07","date_gmt":"2024-03-07T14:32:07","guid":{"rendered":"https:\/\/one.sightlinemg.com\/federaltimes\/uncategorized\/2024\/03\/07\/commerce-dept-minority-business-agency-ordered-to-serve-all-races\/"},"modified":"2026-08-08T05:12:00","modified_gmt":"2026-08-08T05:12:00","slug":"commerce-dept-minority-business-agency-ordered-to-serve-all-races","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/federaltimes\/management\/2024\/03\/07\/commerce-dept-minority-business-agency-ordered-to-serve-all-races\/","title":{"rendered":"Commerce Dept. minority business agency ordered to serve all races"},"content":{"rendered":"\n

A federal judge in Texas has ordered a 55-year-old U.S. agency that caters to minority-owned businesses to serve people regardless of race, siding with white business owners who claimed the program discriminated against them.<\/p>\n\n\n\n

The ruling was a significant victory for conservative activists waging a far-ranging legal battle<\/a> against race-conscious workplace programs, bolstered by the Supreme Court\u2019s ruling last June dismantling affirmative action programs<\/a> in higher education.<\/p>\n\n\n\n

Advocates for minority-owned businesses slammed the ruling as a serious blow to efforts to level the playing field for Black, Hispanic and other minority business owners who face barriers in accessing financing and other resources.<\/p>\n\n\n\n

Judge Mark T. Pittman of the U.S. District Court of the Northern District of Texas, who was appointed by former President Donald Trump, ruled that the Minority Business Development Agency\u2019s eligibility parameters violate the Fifth Amendment\u2019s equal protection guarantees because they presume that racial minorities are inherently disadvantaged.<\/p>\n\n\n\n

The agency, which is part of the U.S. Commerce Department, was first established during the Nixon administration to address discrimination in the business world. The Biden administration widened its scope and reach through the Infrastructure Investment and Jobs Act in 2021, making it a permanent agency and increasing its funding to $550 million over five years.<\/p>\n\n\n\n

The agency, which helps minority-owned businesses obtain financing and government contracts, now operates in 33 states and Puerto Rico. According to its yearly reports, the agency helped businesses raise more than $1.2 billion in capital in fiscal year 2022, including more than $50 million for Black-owned enterprises, and more than $395 million for Hispanic-owned businesses.<\/p>\n\n\n\n

In a sharply worded, 93-page ruling, Pittman said that while the agency\u2019s work may be intended to \u201calleviate opportunity gaps\u201d faced by minority-owned businesses, \u201ctwo wrongs don\u2019t make a right. And the MBDA\u2019s racial presumption is a wrong.\u201d<\/p>\n\n\n\n

Pittman ruled that while the agency technically caters to any business that can show their \u201csocial or economic disadvantage,\u201d white people and others not included in the \u201clist of preferred races\u201d must overcome a presumption that they are not disadvantaged. The agency, he said, has been using the \u201cunconstitutional presumption\u201d for \u201cfifty-five years too many.\u201d<\/p>\n\n\n\n

\u201cToday the clock runs out,\u201d Pittman wrote.<\/p>\n\n\n\n

Dan Lennington, deputy counsel at the conservative Wisconsin Institute for Law & Liberty, which filed the lawsuit, said called it \u201ca historic\u201d victory that could affect dozens of similar federal, local and state government programs, which also consider people of certain races inherently disadvantaged. He said the ruling will pave the way for his and other conservative groups to target those programs.<\/p>\n\n\n\n

\u201cWe just think that this decision is going to be applied far and wide to hundreds of programs using identical language,\u201d Lennington said.<\/p>\n\n\n\n

Justice Department lawyers representing Minority Business Development Agency declined to comment on the ruling, which can be appealed to the conservative-leaning 5th U.S. Circuit of Appeals in New Orleans. In court filings, the Justice Department cited congressional research showing that minority business owners face systemic barriers, including being denied loans at a rate three times higher than nonminority firms, often receiving smaller loans and being charged higher interest rates.<\/p>\n\n\n\n

John F. Robinson, president of the National Minority Business Council, said the ruling is \u201ca blow against minority owned businesses,\u201d and does nothing to help majority-owned businesses because they already enjoy access to federal resources through the Small Business Administration.<\/p>\n\n\n\n

\u201cIt has the potential of damaging the whole minority business sector because there will be less service available to minority-owned businesses,\u201d Robinson said.<\/p>\n\n\n\n

In a similar ruling last year, a Tennessee judge struck down a program run by the Small Business Administration that steered some government contracts toward minority-owned businesses.<\/p>\n\n\n\n

Several other lawsuits have targeted government and private sector programs designed to benefit minority-owned businesses, including the case against the Fearless Fund<\/a>, an Atlanta-based organization that provides early stage funding to businesses owned by women of color.<\/p>\n\n\n\n

Arian Simone, CEO of the Fearless Fund, criticized what she called dwindling corporate commitment to equity programs in the face of the growing legal challenges.<\/p>\n\n\n\n

\u201cPractically every day there seems to be a new legal ruling that chips away at our attempt to close economic gaps that exist for people of color,\u201d she said in a statement. \u201cThe inaction by those who claim to be committed to equity has created the vacuum for this to happen.\u201d<\/p>\n\n\n\n

But Alphonso David, president & CEO of The Global Black Economic Forum, who is helping to represent the Fearless Fund, said the Texas ruling is not necessarily predictive of how those other cases will play out.<\/p>\n\n\n\n

He pointed to another ruling Wednesday in which a conservative group lost its attempt to reinstate a lawsuit against pharmaceutical giant Pfizer over a fellowship program for Black, Latino and Native American professionals.<\/p>\n\n\n\n

The New York-based 2nd U.S. Circuit Court of Appeals ruled Wednesday that the group, Do No Harm, lacked standing because it didn\u2019t identify the plaintiffs by name. David said the Fearless Fund is making a similar argument against the American Alliance for Equal Rights, the conservative group that filed its lawsuit on behalf of anonymous women.<\/p>\n\n\n\n

Do No Harm Chairman Dr. Stanley Goldfarb said he was \u201cdisappointed by the Court\u2019s decision\u201d and would continue to pursue appeals.<\/p>\n\n\n\n

Pfizer said it was pleased with the ruling and is \u201cproud of its commitment to diversity, equity and inclusion.\u201d Despite winning dismissal of the original lawsuit, the company changed the criteria of its fellowship program last year to open it to all races.<\/p>\n\n\n\n

DEI advocates celebrated a separate win on Tuesday when a Florida law that limits discussions on race and diversity in the workplace was ruled to be unconstitutiona<\/a> l by a federal appeals court.<\/p>\n\n\n\n

\u201cI think what we\u2019re going to see over the next months \u2014 and years \u2014 is just a flurry of lawsuits from different directions, with conservative and liberal judges around the country reaching totally contradictory decisions to one another,\u201d said David Glasgow, executive director of the Meltzer Center for Diversity, Inclusion, and Belonging at New York University\u2019s School of Law. \u201cAnd that ultimately it\u2019s going to have to wind its way back to the Supreme Court.\u201d<\/p>\n\n\n\n

___<\/p>\n\n\n\n

AP Race & Ethnicity reporter Graham Lee Brewer and AP Business Writer Haleluya Hadero contributed to this story.<\/p>\n","protected":false},"excerpt":{"rendered":"

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