The judicial rejection of race-based covid relief -The Frontier Post

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George R. La Noue

After President Biden’s inauguration, he immediately signed several Executive Orders to achieve race-based goals because “Our Nation deserves an ambitious whole-of-government equity agenda that matches the scale of opportunities and challenges we face.” When the Biden Administration actually implemented new race- and gender-based programs, however, they were greeted with an outburst of litigation challenges which the judiciary could not ignore. Multiple lawsuits occurred over two COVID-19 relief programs in the $1.9 trillion American Rescue Plan Act of 2021. Embedded in ARPA’s 658 pages was the Restaurant Revitalization Fund (RRF) where the Small Business Administration (SBA) could provide up to $28.6 billion to those businesses and a U.S Department of Agriculture program where USDA could forgive up to 120 percent of its many loans to those in that industry. In the RRF program, a 21-day dispersal priority was given to those businesses owned by women, veterans, and persons identified as “socially and economically disadvantaged,” while the USDA program was to benefit only “socially and economically disadvantaged” farmers and ranchers, excluding all whites, male and female. The key to both programs is that the definition of “socially and economically disadvantaged” is not based on individual race-neutral characteristics, but is instead rooted in racial and ethnic group identifications.

The Legislative Context of ARPA Race Preferences

The origin of the “socially and economically disadvantaged” classifications goes back to 1977, when Parren Mitchell, a founder of the Congressional Black Caucus and chair of the House Small Business Committee, attached an amendment to a Public Works bill that compelled state and local governments seeking federal grants to set aside 10% of the funds for minority firms. The beneficiaries were defined as firms owned by citizens “who are negroes, Spanish-speaking, Orientals, Indians, Eskimos and, Aleuts.” From that legislative origin, a number of similar federal programs, including the SBA’s 8(a), Small Disadvantaged Business (SDB), and the Disadvantaged Business Enterprise (DBE) programs, have flourished.

Decades before Critical Race Theory, dividing op-pressed and oppressors into racial categories, emerged from rarified law school classrooms into mainstream public policy discourse, a series of obscure bureaucratic decisions created a race and ethnic list to determine presumptively who was “socially and economically disadvantaged.”

The bureaucratic list was developed almost three decades ago has almost never been altered and now includes:

Black (a person having origins in any of the original racial groups of Africa); Hispanic (a person of Mexican-American, Puerto Rican, Cuban, Central or South American, or other Spanish or Portuguese origin or culture, regardless of race); Native American (an American Indian, Eskimo, Aleut or Native Hawaiian); Asian-American (Burma, Thailand, Malaysia, Indon-esia, Singapore, Brunei, Ja-pan, China, Taiwan, Laos, Cambodia (Kampuchea), Vietnam, Korea, The Phili-ppines, U.S. Trust Territory of the Pacific Islands (Re-public of Palau), Republic of the Marshall Islands, Fe-derated States of Micron-esia, the Commonwealth of the Northern Mariana Isla-nds, Guam, Samoa, Macao, Hong Kong, Fiji, Tonga, Kiribati, Tuvalu, Nauru, In-dia, Pakistan, Bangladesh, Sri Lanka, Bhutan, the Mal-dives Islands and Nepal.

Persons identified with these racial groups are presumed disadvantaged unl-ess someone comes forwa-rd “with credible evidence to the contrary.” As Circuit Judge Richard Posner not-ed, “The presumption can be rebutted, but given the difficulty of establishing w-hether a particular individual is socially and economically disadvantaged the av-ailability of the presumpti-on is likely to be decisive.”

These categories have not been revisited in decades and exclude U.S. citizens from several Asian and Middle Eastern countries who now might be objectively “socially and economically disadvantaged,” except that these residents were considered bureaucratically to be “white.” Following Justice O’Connor’s objection in City of Richmond v. Cros-on regarding why Eskimo business owners were incl-uded among Richmond’s preferred groups, this narrow tailoring issue is often raised in state and local contracting cases. In litigation regarding federal preferences, however, the group list above has almost never been challenged and these cases have been decided for and against the plaintiffs on other issues. Thus, when various ARPA programs took the “socially and economically disadvantaged” categories off the shelf, it reflected a conscious choice to use racial preferences and reject race neutrality.

The Political Context of ARPA Race Preferences

When ARPA was being drafted, a reading of existing law was that federal ra-ce economic preferences were not frequently litigated and when they were, despite the strict scrutiny standard announced in Cro-son and Adarand v. Pena, courts were often deferential to these programs. Even when preferences were overturned, the decisions were not far reaching eno-ugh to threaten the whole structure of federal race subsidies. Moreover, the support for race preferences had been strengthened by recent elections. Identity politics had become central to the agendas of many Congressional caucuses—the Congressional Black Caucus (CBC), for instance, includes “achieving greater equity” among its core goals—and the Biden administration had embraced the effort to make government and the economy “look like America.” The spread of social justice concepts based on Critical Race Theory meant that reparations, or even massive redistribution of resources from whites to non-whites, had many new adherents.

So it was not surprising that when the RRF was passed by the House Small Business Committee (chaired by Nydia Velazquez, the former chair of the Congressional Hispanic Caucus), it was based on a finding that during the pandemic “women—especially mothers and women of color—are exiting the workforce at alarming rates” and that “eight of ten minority businesses are on the brink of closure.” Consequently, the RFF prioritized distribution of limited relief funds to owners primarily based on their sex and race.

Similarly the effort to have USDA forgive 120 percent of debts owed by “socially and economically” disadvantaged farmers and ranchers was led by Senators Booker and Warnock in the upper chamber and Rep. David Scott in the lower, all members of the CBC. When finally enacted, those debt forgiveness provisions excluded all white farmers and ranchers from what was ostensibly Covid relief.

If the DOJ does not successfully defend the current definitions of “socially and economically disadvantaged” groups, then the use of that concept in other federal subsidy programs is jeopardized.

The stakes in the agricultural preference litigation were increased when USDA turned the issue away from securing equal protection for all toward achieving equity for some. The race-based beneficiaries.