Race-Based Bailouts In COVID Stimulus Bill Face Legal Setbacks

Former Trump aide Stephen Miller could imperil Democrats' racial equity plan

June 15, 2021

Conservative legal groups are challenging the racially driven repayment programs Democrats included in their $1.9 trillion coronavirus relief act.

The American Rescue Plan Act includes billions of dollars in direct payments and loan forgiveness earmarked for minority farm owners and entrepreneurs. Framed as a milestone for racial justice, conservative legal groups say the policies are unconstitutional because they discriminate on the basis of race, violating equal protection principles.

The legal challenges are an early setback for the Biden administration's racial equity agenda. A program that tried to buoy minority restaurant owners has already been blocked by a federal appeals court. A second program that targets farmers and ranchers of color appears to be in serious jeopardy.

Stephen Miller, a former Trump White House aide, is challenging the American Rescue Plan's race-conscious policies through his new group, America First Legal.

"President Biden has cruelly betrayed the civil rights movement by explicitly and invidiously punishing Americans on account of their ancestry or skin color," Miller told the Washington Free Beacon. "America First Legal will not relent in defense of equal rights and equal justice, the two sacred pillars upon which our liberty stands."

The American Rescue Plan Act included $29 billion to help restaurant owners make payroll. The act directed the Small Business Administration to distribute that money only to certain people over the first three weeks of the program. Those "priority applicants" were defined as African American, Hispanic, Asian, or Native American restaurant owners, per a different federal law and the agency's regulations.

The volume of priority applications ensured the fund would run out of money before the end of the three-week program.

Antonio Vitolo, who owns Jake's Bar and Grill near Knoxville, Tenn., challenged the race-based preference in federal court. A divided three-judge panel of the Sixth U.S. Circuit Court of Appeals ruled for Vitolo on May 27.

Writing for the two-member majority, Judge Amul Thapar said the policy's use of race violated equal protection principles. It wasn't enough, Thapar wrote, for the administration to point to general social disparities to justify a discriminatory policy. It has to—and failed to—point to some specific prior discriminatory incident and show the government had a hand in those events.

The decision ordered the agency to stop using race- and sex-based criteria and said Vitolo's application should be approved, provided he met the qualifications.

The legal turmoil the case set off has jeopardized thousands of payments. About 3,000 restaurant owners whose applications were approved have since been told they won't be paid for the time being, according to the New York Times.

Another American Rescue Plan program provides $5 billion in loan relief for minority farmers and ranchers. Sen. Debbie Stabenow (D., Mich.), who chairs the Senate Agriculture Committee, called the program "an important piece of reparations." Lead Senate sponsors like Sens. Cory Booker (D., N.J.) and Raphael Warnock (D., Ga.) similarly put the program in historical terms, noting minority farms have dwindled to historic lows even as the Department of Agriculture consistently enjoys reliable, bipartisan support in Congress.

America First Legal is challenging the loan relief program with Texas agriculture commissioner Sid Miller and a growing coalition of farmers excluded from the program. As with the restaurant relief fund, the plaintiffs say the farm loan relief program is unconstitutional because it violates the Fourteenth Amendment's equal protection clause.

"The COVID-19 pandemic has affected farmers, ranchers, and people from all walks of life. It has done so without regard to anyone's race," the plaintiff's motion for a preliminary injunction reads.

The administration counters that it's on solid ground in its own filings. Government lawyers said Department of Agriculture programs have for decades disproportionately excluded farmers of color. They also said the department failed to fairly and fully investigate civil rights complaints from minority farm owners. As such, they argued Congress is lawfully acting to redress discrimination the government itself practiced.

The lawsuit was filed in the U.S. District Court for the Northern District of Texas, a friendly judicial venue for conservative causes.

District Judge Reed O’Connor put the case on the fast track. The administration was ordered to respond in legal filings to the suit last Friday, and a final legal brief is due this Friday. A decision could come anytime thereafter.

The cases are Vitolo v. Guzman and Miller v. Vilsack.