The Biden Administration has emphasized racial and gender prioritization in a variety of programs from vaccinations to pandemic relief. One such program doled out billions to restaurants based on racial and gender priorities that were challenged in various lawsuits. A Texas judge has now blocked that effort as unconstitutional discrimination and enjoined the Administration from giving such preferential treatment based on racial and gender classifications.
Under the Restaurant Revitalization Fund, the Administration announced that it would give priority to businesses owned by women, racial minorities, veterans, and other “socially and economically disadvantaged.” Philip Greer a white restaurant owner, sued over race and gender discrimination. In a 18-page decision, U.S. District Judge Reed O’Connor found that Greer is “experiencing race and sex discrimination at the hand of government officials” in the Biden Administration. Greer owns the Greer’s Ranch Café, and claims to have lost nearly $100,000 in revenue during the coronavirus pandemic.
The American Rescue Plan Act of 2021 (“ARPA”) is administered by the Small Business Administration (“SBA”) but Greer told the court that he did not submit an application because he was barred from consideration for the program’s first twenty-one days from May 3 to May 24, 2021. ARPA mandates that the SBA “take such steps as necessary” to prioritize eligible restaurants “owned and controlled” by “women,” by “veterans,” and by those “socially and economically disadvantaged.”
Notably, both parties agreed that strict scrutiny applied, but the Biden Administration insisted that such race and gender classification were needed to “remedy the effects of past and present discrimination”. Nevertheless, the court found that the Administration was engaging in racial and gender discrimination. Judge O’Connor held:
This evidence largely falters for the same reasoning outlined above—it lacks the industry specific inquiry needed to support a compelling interest for a government-imposed racial classification. While the Court is mindful of these statistical disparities and expert conclusions based on those disparities, “[d]efining these sorts of injuries as ‘identified discrimination’ would give . . . governments license to create a patchwork of racial preferences based on statistical generalizations about any particular field of endeavor.” Croson, 488 U.S. at 499; see also Adarand, 515 U.S. 200 (extending Croson’s holding to the federal government). “Racial classifications are suspect, and that means that simple legislative assurances of good intention cannot suffice.” Id. at 500.
Thus, the Court concludes that the government has failed to prove that it likely has a compelling interest in “remedying the effects of past and present discrimination” in the restaurant industry during the COVID-19 pandemic. For the same reason, the Court finds that Defendants have failed to show an “important governmental objective” or “exceedingly persuasive justification”9 necessary to support a sex-based classification.
Notably, the Congress and the Biden Administration also used such gender and racial classifications in other aid programs like the aid given to black but not white farmers.
The court issued the injunction because it found that “The evidence submitted by plaintiffs indicates that the entire $28.6 billion in the Restaurant Revitalization Fund may be depleted before plaintiffs’ application can be considered for relief under the program.”