Federal Judge Rules Minority Business Agency Must Serve All Races

A federal judge in Texas has ordered the Minority Business Development Agency (MBDA), a government agency that helps minority-owned businesses, to serve all races equally, ruling that the agency’s criteria violate the constitutional right to equal protection. The judge sided with two white business owners who sued the agency for discrimination, claiming that they were denied access to the agency’s services because of their race.

The plaintiffs, Chad Everett and Rick Brown, are the owners of a construction company and a consulting firm, respectively, in Texas. They applied for the MBDA’s services in 2019, hoping to get assistance in obtaining financing and contracts for their businesses. However, they were rejected by the agency, which told them that they did not qualify as socially or economically disadvantaged individuals.

The plaintiffs argued that the MBDA’s eligibility criteria, which presume that certain racial and ethnic groups are inherently disadvantaged, are discriminatory and unconstitutional. They said that the agency should serve all business owners who can demonstrate their disadvantage, regardless of their race. They also said that the agency’s presumption is outdated and inaccurate, as many minority-owned businesses are successful and wealthy.

The agency, which is part of the U.S. Department of Commerce, defended its criteria, saying that they are based on historical and statistical evidence of discrimination and disadvantage faced by minority-owned businesses. The agency said that its mission is to promote the growth and competitiveness of minority-owned businesses, which contribute to the nation’s economy and diversity. The agency also said that its services are available to any business owner who can prove their disadvantage, and that the plaintiffs did not provide sufficient evidence of their disadvantage.

The Judge’s Decision and the Implications

The judge, Mark T. Pittman, who was appointed by former President Donald Trump, ruled in favor of the plaintiffs, saying that the MBDA’s criteria violate the Fifth Amendment’s guarantee of equal protection under the law. The judge said that the agency’s presumption of disadvantage based on race is unconstitutional, and that the agency must serve all business owners who can show their disadvantage, regardless of their race.

The judge said that the agency’s criteria are based on “stereotypes and generalizations” that do not reflect the reality of the current business environment. The judge also said that the agency’s criteria are unfair and harmful to both minority-owned and non-minority-owned businesses, as they create a “racial caste system” that divides and excludes business owners based on their race.

The judge ordered the agency to revise its criteria and to provide its services to the plaintiffs and other similarly situated business owners. The judge also said that the agency must report to the court on its compliance with the order within 60 days.

The ruling is a significant setback for the agency, which was established in 1969 to address the barriers and challenges faced by minority-owned businesses. The ruling could also affect other government programs and policies that target minority-owned businesses or use race as a factor in decision-making. The ruling could also embolden conservative groups and individuals who oppose affirmative action and other race-conscious measures in education, employment, and other sectors.

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