Discriminatory Transportation Department Program Unlikely to Pass ‘Constitutional Muster,’ Judge Rules

A discriminatory federal program that requires the Department of Transportation to set aside hundreds of millions of dollars in construction contracts for small businesses owned by women and some racial minorities likely violates the Constitution’s equal protection clause, an Eastern District of Kentucky judge ruled on Monday.

As part of a lawsuit challenging the government’s Disadvantaged Business Enterprise, or DBE, program, federal judge Gregory F. Van Tatenhove issued a preliminary injunction barring the government from discriminating against the plaintiffs — a construction contractor and a trucking firm — in Kentucky and Indiana, where they do business.

The companies are being represented by the Wisconsin Institute for Law & Liberty, or WILL, a conservative firm that challenges discriminatory government programs.

The preliminary ruling is the latest win for conservative civil-rights groups fighting against discriminatory government and private-sector affirmative-action programs.

“The Court is keenly aware of the past discrimination that certain groups of people have faced in this country. And the Court is sure that the federal government has nothing but good intentions in trying to remedy past wrongs,” wrote Tatenhove, a George W. Bush appointee. “But remedying those wrongs must still pass constitutional muster.”

The DBE program, which the federal government enacted in 1983, requires that 10 percent of billions of dollars in federal highway construction funds be paid to businesses that are owned or controlled by “socially and economically disadvantaged individuals.” The DBE was most recently reauthorized in 2021 when President Joe Biden signed the Infrastructure Investment and Jobs Act.

In a crude shorthand, the DOT presumes that women-owned businesses and businesses whose owners are from select minority groups are by definition disadvantaged.

The plaintiffs, Mid-America Milling and Bagshaw Trucking, regularly bid on DOT projects and have lost out on federal contracts because they aren’t presumed to be disadvantaged, according to Tatenhove’s 28-page ruling. They contend that because of the government’s DBE goals, they are not allowed to compete for contracts on equal footing.

Mid-America Milling says it lost out on at least 82 contracts in just Indiana since January 2022 because of the discriminatory DBE program, according to court documents.

Lawyers for the government argued that the plaintiffs lacked standing, in part because they were unable to show that they suffered injuries in fact due to the DBE program. And they argued that the entirety of the DBE program is not based on race or gender.

Tatenhove disagreed, writing that the government was trying to “have its cake and eat it too” by arguing both that the DBE’s race and gender presumptions “really do nothing at all” and that they are also “a necessary remedial measure that serve a compelling interest.”

The government failed to show that its race-based discrimination served a compelling government interest and that its use of race is narrowly tailored, Tatenhove wrote.

For a race-based program to survive, the government must show that it is being targeted at remedying a specific episode of past discrimination. But in the case of the DBE program, the government’s evidence is “too broad,” Tatenhove wrote.

The government “points to societal discrimination against minority-owned businesses generally,” the judge wrote, adding that it “has not shown how each of its favored groups suffered discrimination.”

Tatenhove also called out the government’s “scattershot approach” to determining which minority-owned businesses should be presumed to be disadvantaged.

“A contract business owned by a man from Pakistan receives the rebuttable presumption, but the business owned [by] a man from Afghanistan does not,” he wrote.

He also noted past Supreme Court rulings that have stated that race-conscious programs must have a “termination point” and a “logical end point.”

“The DOT’s DBE program has been around since the Cold War,” he wrote. “It was implemented during the same year that the Space Shuttle Challenger launched its maiden voyage. Star Wars: Episode VI—Return of the Jedi was the top grossing domestic movie, and Kenny Rogers’s and Dolly Parton’s ‘Islands in the Stream’ topped the country music charts for two straight weeks. Is there actually a ‘logical end point’ for the DBE’s racial presumptions?”

Tatenhove concluded that because the government “failed to justify its discriminatory policy, the Plaintiffs will likely win on the merits of their constitutional claims.”

WILL called the ruling a “major legal victory against the Biden-Harris Administration.”

“Brick by brick, we will dismantle federal policies that discriminate against America’s small businesses and entrepreneurs,” Rick Essenberg, WILL’s president, said in an emailed statement. “We started this work in 2021, and we will continue to fight until all American receive equal treatment.”

Sean Manning, a DOT spokesman, told the Washington Post the agency would continue to defend the DBE program as the case plays out, but would comply with Tatenhove’s preliminary ruling in the meantime.

Tatenhove’s decision comes on the heels of another WILL victory earlier this year when a Texas judge ruled that the Minority Business Development Agency’s use of a “codified list of preferred races/ethnicities to determine who gets benefits and who doesn’t” is unconstitutional. That came after last year’s Supreme Court’s ruling in the Students for Fair Admissions cases, which held that it is unconstitutional for colleges and universities to consider a prospective student’s race in their admissions processes.