In 1969, former President Richard Nixon established the Minority Business Development Agency (MBDA) with the aim of focusing on businesses owned by minority groups in the United States, following the Civil Rights Movement. In 1971, Nixon signed an executive order granting the agency access to grants from private and public organizations, enabling them to provide assistance to minority businesses.
Over the years, the agency has remained active and in 2021, it was permanently authorized by Congress and President Joe Biden through the bipartisan infrastructure bill. The MBDA offers grants, consulting, training, government contracts, and other benefits to support the success of minority-owned businesses. However, the notion of the government showing preferential treatment based on race resulted in a lawsuit against the Biden Administration. In early June, a federal judge issued a preliminary ruling on the matter.
On March 20, 2023, Matthew Piper, Jeffrey Nuziard, and Christian Bruckner filed a lawsuit against the MBDA, the president, and other members of the administration in the US District Court for the Northern District of Texas. The plaintiffs challenged both the government agency itself and the funding provided to it by the federal government.
The basis of their argument was that the agency is designed to assist minority-owned businesses. To qualify for the agency’s services, a business must have at least 51% ownership by individuals from economically or socially disadvantaged groups. Additionally, the daily operations and management of the business must be controlled by individuals belonging to those groups. The plaintiffs contended that the agency is discriminatory because it uses race as a criterion to determine who belongs to a “socially or economically disadvantaged” group and does not allow others, such as white individuals, to be included in that group.
District Judge Mark T. Pittman, who was appointed by former President Donald Trump, issued a preliminary injunction against the agency on June 5. The judge’s initial statement in his decision made his position on the issue quite evident, stating that “The Constitution requires equal treatment under the law.”
Pittman further elaborates that whenever the government utilizes a racial classification that results in unequal treatment under the law, it should be subjected to strict scrutiny. In this specific instance, the MBDA exclusively offers its services to a specific group of businesses determined by their racial or ethnic composition. However, the government has not provided a convincing justification as to why this narrow tailoring serves a “compelling government interest.” Consequently, the judge believes that the plaintiffs have strong grounds to succeed in their case and has issued a temporary injunction instructing the government to cease its discriminatory practices against the plaintiffs.
