The principal basis of the reparations, systemic racism, and Black Lives Matter policy agenda has been the planned and deliberate ignoring of the federal constitution (“any person”) and federal civil rights laws (“no person”), both of which create and guarantee the rights of individuals against racial discrimination by private and public institutions and programs. Now, that racial agenda has been tested at the federal appeals court level and lost mightily.

Section 8(a)(1)(B) of the Small Business Act permits the Small Business Administration (SBA) to give grants and contracts to small businesses that are “socially and economically disadvantaged” [15 USC 637(a)]. However, since 1998, the SBA has followed its own published rule in which it set out a remarkably long list of businesses owned by individuals who enjoy the “rebuttable presumption” that they are socially disadvantaged: not only black, Hispanic, and Native Americans, but also 31 other races, ethnicities, or tribes from Asia (India, Pakistan, Bhutan, e.g.) and Micronesia (Macao, Fiji, Tonga, e.g.) [13 CFR 124.103].

As part of their $1.9 trillion American Rescue Plan (ARP) passed on March 11, Congressional Democrats created the Restaurant Revitalization Plan in the Small Business Administration (SBA) and allocated $28.6 billion for the “pandemic related revenue loss” of restaurants across the country. But Congress also gratuitously supplemented the SBA’s “traditional” racial and ethnic preferences with an additional preference for women, who are to be “prioritize[d]” in the “awarding of grants” [ARP 5003(c)(3)]. So, women by themselves, regardless of whether they qualified as socially or economically disadvantaged, were given a priority equal to the disadvantaged groups.

Anthony Vitolo, a “white male”—and along with his Hispanic wife the half-owner of a restaurant in Tennessee—filed suit against the SBA, alleging that the denial by the SBA of his application for a Restaurant grant was unconstitutional racial and sex discrimination under the Equal Protection component of the Fifth Amendment’s Due Process Clause. After losing in the federal district court, the federal Sixth Circuit Court of Appeals, in a vigorous 2-1 decision written by Judge Amul Thapar in Vitolo v. Guzman on May 27, overturned the district court’s ruling and ordered the SBA to fund Vitolo’s application. Holding that “[g]overnment policies that classify people by race are presumptively invalid,” the Circuit ruled that the racial discrimination against and exclusion of Vitolo from the Restaurant program could not stand up against the Supreme Court’s constitutional rulings on race.

The Circuit cited the decision of the Supreme Court in Adarand v. Pena (1995) as the primary and controlling precedent. In Adarand, the Court ruled 5-4 in favor of a subcontractor who had suffered racial discrimination and an Equal Protection violation in a similar federal program in the Department of Transportation that gave preferences in highway contracts to business that “were socially and economically disadvantaged.” In so ruling the Adarand Court incorporated a consideration of its 1978 decision in Bakke, the landmark higher-education case that in its nimbleness managed to uphold both equal-admissions and “diversity,” but emphasized that there was “no opinion for the Court” in Bakke, a case that included six different written opinions. In so ruling, the Adarand Court overturned its 5-4 decision in Metro Broadcasting v. FCC (1990) in which it had upheld a minority preference for broadcast licenses. The decision in Metro was not a simple question of Equal Protection but was substantially based on the notion of the public benefit realized by a “diversity” of viewpoints in broadcasting. In that sense, it is comparable to Bakke.

The Sixth Circuit in Vitolo noted that because the use of race in the Restaurant Plan was “explicit,” the Biden administration had conceded that the elevated standard of “strict scrutiny” of racial classifications was to be applied in this Equal Protection case. But in its contention that there was “a compelling interest in remedying past societal discrimination,” the Biden administration had failed to allege “a specific episode of past discrimination,” had not shown “intentional discrimination,” and could not demonstrate that the government had “had a hand in the past discrimination,” the Circuit set out. And even if the government could somehow show a compelling interest in remedying a “specific episode” of discrimination, the Biden DOJ had not shown that its SBA racial preferences excluding whites was “narrowly tailored” to accomplish the goal. “Workable race-neutral alternatives” are to be preferred. And according to the facts of the case, there was “a great number” of such alternatives, including small-business grants to any restaurant that had been unable to secure capital and credit during the pandemic, grants to restaurants that had not yet received any federal pandemic relief funds, or even restricting grants to those minority-owned restaurants that could prove that they had been denied the federal funds because of their race.

Turning to the free-standing and non-economic sex preference added by the Congress to the SBA’s concept of “disadvantaged,” the Circuit cited as authority United States v. Virginia, the 1996 Supreme Court decision in which the Court by a 7-1 margin abolished the male-only admission policy of the Virginia Military Institute. Under the precedent of that case, the Circuit said, the Biden administration had to show that the Restaurant Plan’s sex preference served “important governmental objectives” and was “substantially and directly related” to those objectives. The administration failed the first prong because it could not show that it was remedying “specific instances” of sexual discrimination, for “general claims of societal discrimination are not enough” under the Constitution. And, second, the goal of including a preference in the Restaurant Plan for all women “even if they are not economically disadvantaged” effectively undermined and was not substantially related to the pandemic remedy of helping those who suffered economically. The Circuit concluded that “[t]here is no need to use sex as a proxy when the government seeks to remedy a problem that is purely economic.”

In dissent, Circuit Judge Bernice Donald, maintaining that “[h]ere, context matters,” essentially argued that the racial and sexual preferences were allowable responses to an emergency. She asserted that the Restaurant Revitalization Plan was “not so much traditional legislation in which the government has sought to encourage a long-term change in public policy but rather a one-off monetary lifeline aimed at ameliorating short-term economic devastation.” In contrast, President Biden proclaimed “systemic racism” in his inaugural address as an all-encompassing project of his administration. And it is at least a “two-off” since on June 10 a federal district court judge in Wisconsin ordered a halt to a similar Department of Agriculture program for “socially disadvantaged” farmers because it discriminated against white farmers.

In Adarand, Justice Sandra Day O’Connor, writing for the Court, said that racial “special preference[s]” in law will “delay the time when race will become a truly irrelevant, or at least insignificant factor.” She said that “right to equal protection of the laws” is “a personal right.” In concurrence, Justice Antonin Scalia said, “[W]e are just one race here. It is American.” In Parents Involved (2007), Chief Justice John Roberts, writing for the majority, said that “the way to stop discrimination on the basis of race is to stop discriminating on the basis of race.” In his concurrence with dissent in LULAC v. Perry (2006), Justice Roberts added that “it is a sordid business, this divvying us up by race.” In her much-cited and wistful statement in the higher-education admissions case, Grutter v. Bollinger in 2003. Justice O’Connor opined that “the Court expects that 25 years from now, the use of racial preferences will no longer be necessary to further the interest approved today.” With only 7 of the 25 years remaining, the Biden administration and the Democratic party are going in the opposite direction.

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