Federal Court Rules the U.S. Cannot Consider Sex or Race in Distributing Pandemic Relief Funds to Restaurants

The Sixth Circuit Court of Appeals has ruled that President Biden’s administration cannot distribute COVID-19 relief funds to restaurants based on the sex or race of the applicants.

The lawsuit, introduced by the Wisconsin Institute for Law & Liberty on behalf of Antonio Vitolo, who owns Jake’s Bar and Grill in Harriman, Tennessee.  The suit alleges that from May 3 – May 24, the $28.6 billion Restaurant Revitalization Fund has been processing and funding requests only from businesses owned by veterans, women, or economically and socially disadvantaged individuals.

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Last week, the U.S. Sixth Circuit Appeals Court issued a 2-1 opinion that the government (specifically, the Small Business Administration) cannot distribute Covid-19 relief funds based on sex and race and must stop using such criteria when processing Vitolo’s application for his East Tennessee restaurant.

The Small Business Administration reported receiving more than 303,000 applications, of which nearly 38,000 were approved for more than $6 billion. The SBA says 57% of these applications come from socially and economically disadvantaged women, veterans, and entrepreneurs. Vitolo applied for aid but claims that he did not qualify to receive it yet because he is a white male.

“Vitolo challenges the Small Business Administration’s practice of using race and sex preferences when allocating Restaurant Revitalization Funds. The government concedes that it uses sex and race to prioritize applications, but it contests that its policy is still constitutional. We disagree,” the majority opinion said.

“The government is working to allocate limited COVID relief funds based on race and sex. The Court of Appeals held it could not and that we are likely to succeed on a claim that this program is unconstitutional,” Wisconsin Institute for Law & Liberty President and General Counsel Rick Esenberg said.

The ruling says the SBA shall fund Vitolo’s grant applications, if approved, “before all later-filed applications, without regard to processing time or race or sex of the applicant.” The Appeals Court announced that the government had not shown a compelling interest in defending preferences based on race and gender.

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The Court of Appeals said the government could not identify specific cases of past discrimination and provided little evidence that past discrimination has affected many priority groups.

“Indeed, the program of racial preferences detailed in the government’s regulation preferences for Pakistanis but not Afghans; Japanese but not Iraqis; Hispanics but not Middle Easterners—is not backed by any record evidence at all,” the opinion said. “When the government proclaims race-based policies, it must operate with a scalpel. And its cuts must be informed by data that suggest intentional discrimination.”

In a dissenting opinion, Justice Donald wrote, “It took nearly 200 years for the Supreme Court to firmly establish that our Constitution allows the government to use race-based classifications to remediate past discrimination.”  “It took only seven days for the majority to undermine that longstanding and enduring principle.”

The ruling still permits the Small Business Administration to prioritize restaurants run by veterans.

What do you think? Are there ever circumstances where an applicant’s sex, race, or national origin is relevant in receiving government funds?

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