Kentucky Judge Partially Blocks Minority Business Program

A federal judge in Kentucky has issued a partial injunction against a U.S. Transportation Department program designed to allocate contracts to minority-owned businesses. This decision, made by U.S. District Judge Gregory F. Van Tatenhove, represents the latest in a series of legal challenges to government affirmative action initiatives.

The Disadvantaged Business Enterprise (DBE) program, established in the early 1980s, aims to direct at least 10% of federal transportation infrastructure funding to firms owned by women and minorities. This program has been a significant part of federal efforts to address historical disparities in government contracting.

Judge Van Tatenhove's 28-page opinion, issued on Monday, limits the injunction to the two plaintiffs - both transportation contractors - and their operations in Kentucky and Indiana. However, the judge's reasoning suggests a potential broader impact, stating that the plaintiffs would "likely win on the merits of their constitutional claims."

The DBE program has been instrumental in supporting disadvantaged businesses. Over the past five budget years, these enterprises have secured nearly $34 billion through federal transportation contracts. In 2023, disadvantaged contractors achieved a milestone, securing 13% of federal dollars, slightly surpassing previous years' figures.

The legal challenge was brought forth by Mid-America Milling and Bagshaw Trucking, two long-standing Indiana-based contractors. Mid-America Milling, a road surface removal company with over four decades of experience and 32 employees, claims to have lost at least 82 jobs to DBE businesses since January 2022, despite offering lower bids. Similarly, Bagshaw Trucking, a 40-year-old heavy trucking and hauling contractor, reports annual losses of $3 million to DBE businesses.

The Wisconsin Institute for Law & Liberty, representing the plaintiffs, expressed satisfaction with the ruling. Daniel Lennington, a lawyer with the institute, stated:

This case is part of a broader trend of legal challenges to diversity initiatives, which gained momentum following the Supreme Court's decision to overturn race-conscious college admissions in June 2023. Other recent rulings have affected programs such as the 55-year-old Minority Business Development Agency and the Small Business Administration 8(a) program for minority contractors.

Supporters of the DBE program, including John Porcari, former deputy secretary for Transportation, and Phillip Washington, CEO of Denver International Airport, argue that it increases competition and provides crucial opportunities for disadvantaged businesses. They emphasize the program's role in fostering economic growth and generational wealth in underserved communities.

The Justice Department defends the program, citing research that indicates persistent race- and gender-based discrimination across various industries. They argue that the DBE initiative is necessary to combat statistical disparities and remedy past and ongoing discrimination in the federally assisted transportation contracting market.

As the legal proceedings continue, the future of the DBE program and similar initiatives remains uncertain. The outcome of this case could have far-reaching implications for government efforts to promote diversity and inclusion in federal contracting.