The Use of Race in the Biden-Harris Administration, and Legal Challenges to Race-Based Policymaking

Ryan Lacey:  Hello and welcome to this Federalist Society webinar. This afternoon, June 15, 2022, we discuss “The Use of Race in the Biden-Harris Administration and Legal Challenges to Race-Based Policymaking.” My name is Ryan Lacey, and I’m an Assistant Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinions are those of our experts on today’s call.

 

Today, we are poised to have an excellent discussion led by William Trachman, whom I will introduce very briefly. William E. Trachman is a General Counsel for the Mountain States Legal Foundation. Previously, he was appointed to serve on the Department of Education as the Deputy Assistant Secretary of the Office for Civil Rights. Prior to his appointment, he served as General Counsel to the Douglas County School District. Presently, Mr. Trachman served as Co-Chair of the Colorado Federalist Society, a member of the US Commission on Civil Rights’ Colorado Advisory Board, and as an Adjunct Professor of the University of Denver, Sturm College of Law. He attended U.C. Berkeley for both undergraduate and law school and then clerked for the Tenth Circuit Court of Appeals.

 

After our speakers give their remarks, we will turn to you, the audience, for questions. If you have a question, please enter it into the Q&A feature at the bottom of your screen, and we will handle questions as we can toward the end of today’s program. With that, thank you for being with us today. Will, the floor is yours.

 

William E. Trachman:  Well, thanks so much for that, Ryan, that very flattering bio. I also want to introduce our main speaker today, Daniel Lennington, who’s going to be talking about the Biden administration’s use of race in policymaking, where we are, and where we’re headed. Dan and I first met last year after the American Rescue Plan Act was enacted, and I remember him telling me that he had farmers and ranchers calling him, coming out of his ears based on all of the racial preferences from the American Rescue Plan Act.

 

I’m very honored to have him here. He is Deputy Counsel at the Wisconsin Institute for Law and Liberty, formerly worked for the Wisconsin Attorney General, and before that was a criminal prosecutor in the state of Oklahoma. He is a graduate of Hillsdale College and Valparaiso University School of Law. With that, Dan, let’s get started. Why don’t you begin by telling us a little bit about where we are? What’s the lay of the land in terms of the Biden administration? We’re just short of the 17-month mark since President Biden took office. Where do we stand 17 months after the inauguration?

 

Daniel Lennington:  Right. Thanks, Will. I think it’s safe to say that no other administration in US history has infused race into all levels of policymaking the way that the Biden and Harris administration have done. Their main devotion, as all the listeners and viewers know, is that they abide by the theory of systemic racism—the idea that racial disparities in America have resulted from racism, and those racist institutions and racist policies need to be rooted out so that we have no more racial disparities in America. And so, if you view what they’ve done through that lens, it starts to come into focus as to what they’re doing.

 

Now, in the last 17 months, as you said, there’s basically four pillars of the Biden administration’s race-based priorities. And I’ll go through each of these in turn. Number one is the American Rescue Plan Act of 2021 that was passed March of 2021. That was the $1.9 trillion stimulus—Biden’s signature accomplishment -- legislative accomplishment. It’s really the cornerstone of his administration and everything that’s been going on right now in the administration. Number two is the bipartisan infrastructure bill, which, as you can hear, is bipartisan. Republicans joined Democrats. This is the $1.2 trillion spending bill that’s focused on infrastructure and transportation-related projects. The third pillar of the race-based policymaking is called the Justice40 Executive Order, which I will talk about. And the last is the executive order on equity, on racial equity. So two executive orders and two legislative accomplishments are the four pillars.

 

So I’d like to start out with an important issue. A lot of people ask me, “How do you find evidence of race-based policymaking by the Biden administration?” And for those who are uninitiated, the best way to look at it is through the use of euphemisms. Very rarely does the Biden administration ever use the words “African American” or “Hispanic” or anything like that. They say things like -- “equity” is a big word. The word “underrepresented.” The word “communities” very many times is a proxy for race. And definitely, the phrase “socially and economically disadvantaged.” “Underutilized” is also another sort of code word.

 

These are all code words that, when you see a bill like ARPA or the bipartisan infrastructure bill, the first thing you should do is search for the word “disadvantaged.” And “disadvantaged” is really a proxy for race in race discrimination. And so, this phrase comes -- “socially disadvantaged” comes from the 1970s in the Small Business Act. And it’s a presumption in federal law that anybody who’s -- most people who are not white are disadvantaged, and they need special help.

 

I want to talk to you a little bit about, first, ARPA. So this is the first pillar of the race-based policymaking. So this represented a major expansion of the use of race in the distribution of benefits. Since the 1970s, there’s been some race-based preferences. They’ve been primarily cabined to transportation projects and government contracting. But these have been frequently litigated to the US Supreme Court. You may remember cases from the 1980s, Croson and Adarand. These were about set-asides and preferences for racial minorities. But in the last 16 months, 17 months now, racial preferences in federal law have really expanded and exploded because of ARPA.

 

So for some perspective, during the Trump administration, Trump’s signature COVID relief was called the CARES Act. That was in March 2020. In that act, there was a single appropriation of $10 million for something called the Minority Business Development Agency. This was an agency that had existed for quite some time, and it was a relatively small appropriation of $10 million. The phrase “socially disadvantaged” was used just twice in the CARES Act, which was a 335-page bill. By contrast, the same phrase, “socially disadvantaged,” was used 48 times in ARPA—that’s a 243-page bill, a smaller bill—and there’s over $50 billion set aside for racial minorities in ARPA.

 

So the key parts of ARPA that contain the racial preferences are, first and foremost, the farmer loan forgiveness programs. This is probably the most widely known racial preference in ARPA. The farmer loan forgiveness program was $4 billion that was given to the U.S. Department of Agriculture. The U.S. Department of Agriculture was required to give the money in the form of debt relief to “socially disadvantaged farmers,” which again means not-white farmers. And the sole requirement of getting the money was that you had to be not-white, and you had to have debt with the US government—U.S. Department of Agriculture. The law reads -- all these laws on racial preferences actually are straightforward and simple. This law says, “The Secretary shall provide a payment in the amount of up to 120 percent of the outstanding indebtedness of each socially disadvantaged farmer.”

 

Now, “socially disadvantaged,” as I said, is defined in federal law. Actually, the Small Business Administration has defined this since 1970s. It says that individuals who’ve experienced racial or ethnic preference or cultural bias are socially disadvantaged, but it gives an automatic preference to black Americans, Hispanic Americans, Native Americans, Asian, Pacific Americans, and subcontinent Asian Americans. So if you’re in any of those groups, you automatically get a preference, and you would have your loans forgiven under the farmer loan forgiveness act -- farmer loan forgiveness program—that was the $4 billion one.

 

The second major part of ARPA for racial policies was the Restaurant Revitalization Fund. This was a $28.6 billion fund for any restaurant that could demonstrate year-over-year losses from 2019 to 2020. Congress authorized the Small Business Administration to issue grants in the form of cash payments directly to restaurants. But the program was designed to have a 21-day priority period where anybody could apply for this grant but not if you’re a white male-owned restaurant. So if you’re a white male, you’re excluded from the 21-day preference period.

 

What we found out after the litigation is that $28.6 billion is approximately the amount of losses that was experienced by nonwhite-owned restaurants. So the program was very closely designed to provide relief only to nonwhite restaurants – nonwhite male restaurants, and to exclude white males from consideration. Again, that law used the phrase “socially disadvantaged” and said quite clearly, like the farmer loan forgiveness program, that “the administrator shall prioritize awarding grants to eligible entities that are small business concerns owned and controlled by women, veterans, or socially and economically disadvantaged individuals.” So again, a very simple and straightforward piece of legislation.

 

The third area in ARPA that has a massive racial preference is something called the Homeowners Assistance Fund. This is a $10 billion fund run by the Department of Treasury. Grant programs to states and local -- this was for grant programs to local governments and states to assist homeowners who struggle with their mortgage. The program’s means tested, meaning you only get the money if you have certain income below a certain level. But ARPA allows higher income limits for nonwhite homeowners. So for example, in some areas of the country, if you had a family of four, you could get the benefit of the Homeowners Assistance Fund, could receive a grant if you made under $100,000. But if you were African American, you could receive the same grant if you had income up to $120,000. So you could have a higher income limit under this program.

 

Now, the states had actually, according to the Department of Treasury, had an option of including this race-based preference, which I’m not sure is actually allowed for in the law, but the Treasury did give an option to include the race-based provision. Forty-two states have a program up and running right now. Many states initially had race-based preferences in their draft programs, which are available online, but the ones that have actually been implemented have removed a lot of those. And we can talk about later why that may have happened. But there are a few states—Virginia, Pennsylvania, Michigan are the ones that I found—that still definitely have different income limits based on your race. So you get the grant depending on how much money you make but also dependent on your race.

 

There’s also a Small Business Credit Initiative. That is the fourth part of ARPA’s race-based provisions. This is another $10 billion Department of Treasury program. There are grants that U.S. Department of Treasury gives to states and local governments to help small businesses. In this $10 billion pot of money, there is a $1.5 billion set aside for nonwhite businesses and then another $1 billion set aside for jurisdictions that demonstrate robust support for nonwhite businesses. So if you are a jurisdiction that really, really supports nonwhite businesses, you get access to this billion dollars. So all told, there’s about a 25 percent set-aside in the Small Business Credit Initiative based on race.

 

This is pretty early on in the development in this part of ARPA. Only five states right now have approved plans. And I can show you exactly how it’s worked through what Maryland has done. Maryland received $198 million through Department of Treasury, and they’ve taken that money, and they’ve disbursed it through a variety of existing programs that they have that target socially and economically disadvantaged individuals and what they call minority-led businesses. Several departments within Maryland get this money— Maryland Department of Housing, Department of Commerce, Department of Technology Development. Each agency’s allocating this money to separate programs and to separate localities. So it’s very diffuse. So the money comes from Treasury, and it gets spread out among all of these other different interested parties. And we’re going to talk about later how that may cause some challenges for litigation.

 

The last part of ARPA I want to talk about is the USDA Equity Commission. Congress decided to give USDA $1 billion to address systemic racism and improve land access. It’s a little fuzzy on what Congress actually intended, but the USDA has set up an Equity Commission. They have their own YouTube channel. You can watch their meetings. I watched some of their meetings. And they basically sit around a table and talk about how they’re going to achieve equity in America through this distribution of this billion dollars. There’s very few details available. There’s talk about reparations in the context of African Americans were -- historically, they lost agricultural land, and so we need to give agricultural land back to African Americans as reparations for slavery. There’s a lot of talk about that.

 

Members of the committee in the May 12 meeting, which I watched recently, said that they want to distribute the money according to the principles of intersexuality -- intersectionality as espoused by Kimberlé Crenshaw—so Kimberlé Crenshaw, a famous critical race theorist. And so, you can see this on their YouTube channel. They’re advocating for the distribution of the money according to the principles of critical race theory, which is quite an interesting admission. So that’s ARPA, the five pillars of ARPA, and what ARPA does for race-based distribution of program benefits.

 

The second program that’s another big cornerstone of Biden administration race-based policymaking is the bipartisan infrastructure bill. This was signed by President Biden on November 15, and it’s called the Infrastructure Investment and Jobs Act. So the big enchilada in this program is a ten percent set-aside of all surface transportation funds have to be spent by small business concerns owned and controlled by socially and economically disadvantaged individuals. So that’s $37 billion, and it can only be spent by businesses owned by women and minorities -- women and certain minorities. And so, this is similar to Restaurant Revitalization Fund and the farmer loan forgiveness program in that it uses this phrase “socially and economically disadvantaged individuals.”

 

But Congress included -- what caught my eye is that Congress included a paragraph right at the end of this ten percent set-aside that says something to the effect that Congress acknowledges that this may be struck down by a court. And if it is, all the people who have been awarded contracts should still get their contracts. Congress is basically trying to cover its tracks to say, “Look, we understand this may go out the window, but we still want roads to be built and bridges to built under this program.” So that’s the first I’ve seen of Congress putting in a provision that’s supposed to be some sort of constitutional savings clause. And so, if you go into the bipartisan infrastructure bill and you just do a Control+F, you can type in the word “unconstitutional,” and you can see this little section in there.

 

But there’s many other examples in the bipartisan infrastructure bill about race discrimination. I’ve counted 20 different programs with race-based provisions. There’s the Healthy Streets program, Reconnecting Communities program, Multimodal Infrastructure Investment program, digital equity grants, minority business development grants. All these have some race-based components. There’s two main categories of preference here. One is giving a preference to the group that actually receives the dollars. Like our previous programs we discussed, these dollars are supposed to go to nonwhite people. Also, there’s a different type of spending where they want to spend it in such a way that a racial community receives the benefit. And these are basically like geographic type benefits. The money is going to go this neighborhood, which we know has a high minority residence population, versus going to a company that is owned by a minority. So those are two different categories.

 

Just to give you some examples here, the Advanced Energy Manufacturing and Recycling Grant Program is $750 million to establish recycling facilities related to climate change, whereby the secretary shall give priority to eligible entities that are minority-owned. So if you like to build recycling facilities and you’re a white person, you’re not going to get priority under this law. So that’s one. There’s also a Minority Business Development Act that’s part of this bipartisan infrastructure bill that makes the Minority Business Development Agency a permanent agency of the United States—it had been temporary—and it expands these things called minority business centers, which have been cropping up throughout the United States. You may have seen them where you live, wherever you are. They’re in many, many states. They’re business centers that are devoted to helping only nonwhite businesses.

 

Smart grants—smart grants are transportation grants. There’s a $500 million priority in there for “minority or disadvantaged groups.” There’s all sorts of fun things in there. If you’re interested, you can go to the bipartisan infrastructure bill and again just do a Control+F for the word “disadvantaged” or “equity.” There’s a little section on tree equity and the fact that there’s -- where trees exist and where trees don’t exist is apparently evidence of systemic racism, and so we’re going to do something about the trees in America to get rid of racism. That’s several tens of millions of dollars in there, too.

 

So the last two things I want to talk about as far as the four pillars of the Biden administration racial policymaking is the Justice40 Initiative and then the executive order on equity. So the Justice40 Initiative says that 40 percent of all federal spending on climate, clean energy, affordable housing, and clean water must flow to “disadvantaged communities.” About $29 billion has been spent so far. The definition of disadvantaged under this Justice40 Initiative is hard to pin down. The rhetoric surrounding Justice40 has definitely been clear that the plan is to help certain minority communities based on their race. Subsequent White House communications from the Office of Management and Budget have stripped out explicit race discrimination or attempted to strip out explicit race discrimination, but it appears that there’s many indicators of what disadvantaged means that may be a proxy for race.

 

For example, the Department of Transportation has come up with a spreadsheet of 22 different indicators of what disadvantaged means. A lot of these categories kind of seem like proxies for race, so it’s kind of hard. We’re going to have to do some public records requests and see what exactly -- how they came up with these. The Department of Energy, a different department, has 36 separate indicators of disadvantaged. So just among the Biden administration, there’s fights apparently between the agencies as to what is an indicator of the disadvantage and what is not. An indicator of disadvantage may be your unemployment rate in your community, income, whether you have incomplete plumbing in your house, whether you live in a mobile home, the risk of cancer. There’s all sorts of different indicators.

 

And then the last thing I’ll talk real briefly about is the order on equity. This is a very fuzzy executive order that mandates agencies to eliminate all racial disparities in all corners of the federal government. It’s going to affect hiring. It’s going to affect training of employees, program spending, just about anything an agency does. The effects are now being felt as agencies are putting something called equity plans online. And we see this in our choice state government here in Wisconsin and states around the country. State agencies and federal agencies are putting up equity plans that sort of outline what they’re going to do to get rid of racial disparities. So the real focus of this is all on race and treating minority groups differently. Most equity action plans were released April of 2022.

 

So I know that’s a long-winded discussion there, but that’s basically the four pillars of where the Biden administration right now is on race discrimination and their plans to eliminate all disparities in all corners of the United States.

 

William E. Trachman:  I don't know if it’s long-winded. It seems appropriately winded, given how much there is to talk about. My firm, Mountain States Legal Foundation, and the Southeastern Legal Foundation teamed up on a few suits involving the farmer rancher subsidies, the 120 percent debt relief last year, obtaining a preliminary injunction in Tennessee on the program. And the question that we got all the time was, “How can any of this be legal?” We have a constitution. We have the Fourteenth Amendment, which applies to the federal government through the Fifth Amendment, reversing corporation doctrine. These all seem like blatantly illegal racial preferences. How is it that the Biden-Harris administration is so willing to jump into this area, and how come all of these aren’t just being immediately struck down? Do you want to address some of the litigation that’s been going on and some of the issues that have popped up through litigation?

 

Daniel Lennington:  Yes. Well, it’s a question we get all the time, too—“How can they do this?” It’s really funny to me. In preparation for another piece of litigation we’re going to file in the next month or so—which is one of the topics I mentioned above, but I won’t tell you which one it is—is looking back at some of these cases from the 1980s—Croson and Adarand and Wygant. They’re all so clear about what the government can do and what the government can’t do.

 

And I went back and saw in the Bush administration in 2005, he actually had a committee that put together a report that said, “Why aren’t federal agencies following the rules of Adarand and Croson and the Supreme Court?” Federal agencies are just ignoring these rules, and they keep doing racial preferences even though there’s very specific rules about when you can do a racial preference. And it seems like our agencies and governments have just said, “Hey, come sue us.” The downside of losing in court is not as bad, apparently, as the downside of upsetting our political friends. So I think there’s a calculus here that state, local, federal actors/officials have decided that they would rather just do the racial preference and lose in court and make -- come-and-take-it sort of attitude.

 

So whenever -- just as the -- so from the legal standpoint, obviously, whenever the federal government makes decisions based on race, the policy has to be evaluated with strict scrutiny. Now, that’s been the law in our country for 30 years at least. The government must prove that their program is narrowly tailored to address a compelling government interest. This is the highest level of scrutiny. And it’s unusual for a government program to escape strict scrutiny, as I would say. That’s my assessment. It doesn’t mean it’s fatal, but it means you’re probably going to lose if you’re the government and you get strict scrutiny placed on you.

 

So to establish compelling interest in a government preference, the government has to prove three points. And these three points were laid out really well by Judge Thapar of the Sixth Circuit last year in a case that we brought called Vitolo v. Guzman, which is the case about the restaurant preference. And Judge Thapar said, “Look, there’s three things you have to prove.” You have to prove government—government has to prove—you have the burden of proving that you are trying to remedy a specific episode of past discrimination.

 

So if there is some discrimination that occurred in the past, and you have identified it and put a box around it, and you, the government, you want to fix that—that’s number one—that this discrimination in the box—number two—was intentional discrimination. It was not just racial disparities or generalized societal discrimination or, “We just have a feeling there’s racism somewhere, but we can’t really find it.” This is intentional discrimination. And number three, the government has to have had a hand in it. The government had to have -- be some sort of a participant in that. So Judge Thapar said, looking at all of these Supreme Court precedents from the past 30 years, “If you can prove these three things—specific episode of past discrimination, intentional discrimination, and the government, you guys had a hand in it, be our guest. Go fix it. Go fix it.”

 

Then, it’s got to be, obviously, narrowly tailored. So just take the farmer loan forgiveness example from the beginning. So this is a really good example of how Judge Thapar’s test would work. In the 1980s and 1990s, the U.S. Department of Agriculture did intentional discrimination against minority farmers. That’s a bad thing. It’s horrible. But Judge Thapar would say, “Good. You can go back, and you can fix those things that you did that were intentional and that you had a hand in.” But the farmer loan forgiveness program, all it does is it just forgives loans for any minority farmer.

 

Now, a minority farmer may or may not have been the victim of discrimination. And so, that’s really where that lawsuit completely fell apart. So in May and June of last year, there were many lawsuits—over a dozen lawsuits—filed around the country against the farmer loan forgiveness program—this $4 billion loan forgiveness program. The government claimed it was attempting to remedy racial disparities that resulted from historic inequities in the farming industry, including race discrimination by USDA itself. But USDA never claimed that the purpose of the $4 billion was to fix the problem that it had created. It pointed a lot to generalized societal discrimination.

 

And courts around the country rejected that, rejected that, said, “That’s not good enough.” So the program was first enjoined—I get to brag a little bit, Will—by Wisconsin Institute for Law and Liberty. We got the first nationwide injunction on June 3 in the Western District of Wisconsin. It was a temporary restraining order. It was followed by other victories around the country, including by Mountain States Legal, Pacific Legal Foundation, America First Legal. Other cases: Liberty Justice, Upper Midwest Law Center, all of these -- state-based litigation, regional-based litigation, Pacific Legal Foundation. All these great national and regional organizations went out and won cases, got preliminary injunctions.

 

Now, most of those cases are stayed now while the case seems to be proceeding in Texas and then in Southern District of Illinois. I think Texas is America First, and Southern District of Illinois is Pacific Legal. Those cases should be decided on summary judgment because very soon -- I don't know why the judge is taking so long, no offense to the judge. But even if you take everything the government says as 100 percent true, which is totally fine, they’re still not meeting the test for compelling state interest. They’re not trying to remedy their own discrimination that was a specific episode. They’re trying to cure racial disparities in farming because that’s what they have told the world—“There is not enough black farmers. We want more black farmers. We want to forgive the loans for black farmers.” None of the black farmers need to prove that they were the victim of discrimination. And so, right there, in my view, case is over. But we’re going to have to wait for summary judgment.

 

There was some talk about the government abandoning the program. Congress did try to abandon the program. And if our listeners remember the Build Back Better plan, there was a provision in the Build Back Better plan to get rid of the farmer loan forgiveness program that would have negated all of our pending cases. And they would have redistributed the $4 billion on other metrics, nonracial metrics, which would have been great because government should have done that. They didn’t, though.

 

The second big lawsuit after the farmer loan forgiveness and all those lawsuits was the restaurant revitalization fund. We represented a restaurant in Harriman, Tennessee, called Jake’s Bar and Grill. Tony Vitolo was the owner with his wife. She’s Hispanic. He’s white. They own the restaurant 50-50. But because Mrs. Vitolo did not own 51 percent of the restaurant, Jake’s Bar and Grill was excluded from priority consideration. We filed a lawsuit in Chattanooga—federal lawsuit. We lost. And we filed an emergency appeal with the Sixth Circuit, and Judge Thapar issued his opinion, as I talked about before, and ruled that the SBA violated equal protection doctrine by giving a 21-day preference to nonwhite male restaurants.

 

And he halted the program. We went as fast we can. By the time Judge Thapar’s order had hit ECF, SBA had spent about $15 billion of the $28.6 billion. So that money’s down the drain. SBA then reordered their line, took away all the racial priorities, and started to pay out restaurant owners without regard to race. And our client, Tony Vitolo, got $105,000. So, small victory, but there were many, many, many restaurant owners that got nothing, and they got no money because of their race. And there’s really no remedy for those people, unfortunately. We’ve talked to and thought about bringing a Bivens action against the federal government, but Bivens doesn’t seem like too hot of a remedy right now these days. And so, unfortunately, these restaurant owners are going to keep their place in line. SBA said, “You’ll keep your ticket in line. And if Congress decides to ever dump money back into the restaurant revitalization fund, you might get your money based on your current priority.”

 

The last sort of pre-litigation that we’ve been involved in was with the Homeowners Assistance Fund. And this is going to get into some of the challenges here. So remember the Homeowner Assistance Fund is $10 billion given from Treasury to all the states, and then the states get to do what they want to do with the money? Well, in Wisconsin here, we were set to get $100 million. And our governor put out a plan, and he said, “Yeah, we’re going to give this money out with a racial priority. If you’re white, your income limits are X. And if you’re black, your income limits are Y.” And we wrote him a letter and said, “Hey, we’re the attorneys from the farmer case and the restaurant case. Do you want to make this a hat trick here?”

 

The governor, fortunately, though, he backed down. He changed his program. He took away all the racial preferences in there. We noticed that many states also filed suits. I’m not taking credit for that, and we’re not taking credit for that. But I think other states probably saw the writing on the wall that it was going to be hard to defend these. And frankly, if you look at the data, the racial preference really wasn’t going to do anything as a matter of a policy. It really wasn’t going to be as effective as it seemed to on paper. And so, I think a lot of states said, “We don’t want the hassle. We don’t want the hassle of this.”

 

But again, it was a program that was diffused through the states, and so that’s why we didn’t see necessarily a big national litigation effort against the Department of Treasury because it really wasn’t the Department of Treasury that was actually taking the action. Department of Treasury was giving the money to the states, and then the states decided what to do. And also, it’s created a real tricky solution—issue with standing. And I’ll talk about that a little bit later about what type of plaintiff could actually challenge this type of law. So that’s where I think we are on litigation.

 

There are other possible litigation issues out there. The Wall Street Journal, two days ago, had a very nice editorial about Fannie Mae and Freddie Mac and how they are using equity and race discrimination as a way to equalize homeownership rates. You can go read The Wall Street Journal article. It’s very good. There’s a question about whether Fannie Mae and Freddie Mac are state actors. I think that in and of itself would be a really neat litigation issue. They’re called GSEs. They’re not agencies. They have a federal caretaker. It’s all very weird. But yeah, the question about whether Fannie Mae and Freddie Mac are actually federal actors is an important question to be solved, and whether they can use their money in a discriminatory way. I think that’s a very important program that somebody ought to challenge. A homeowner or someone who’s a borrower who’s white would have a very good case, I think, against Fannie Mae and Freddie Mac right now.

 

William E. Trachman:  Yeah. So we have seven-ish minutes before we want to open the floor for questions. If you have a question, go ahead and put it in the Q&A box now. We already have, it looks like, several questions pending. But before we open the floor for questions, I did want to talk about what you just flagged, the challenges of litigation and also some of the opportunities in litigation. One thing that we encountered at Mountain States was the fact that plaintiffs were saying, “Is the only thing that’s going to happen as part of my suit that some other person doesn’t get a government subsidy? I’m not going to achieve a subsidy. I’m just going to stop someone else from getting it.” And then, of course, there’s always the atmospheric question of whether someone who’s white wants to be seen as stopping racial equality or being accused of racism. And so, I am very curious what you see as some of the challenges involved in this litigation, both from the legal standpoint then also the atmospheric standpoint.

 

Daniel Lennington:  Yeah. And so, I talked to, personally, 120 farmers. I got on a forum online that was for farmers where they talked about their crops. It was a very archaic, 90s-style forum online, like you’d need Netscape Navigator to get to it. But I just put in there -- I said, “Hey, does anybody know about this farmer loan forgiveness program?” And I just got inundated with farmers who -- and I talked to, as I said, 120 of them. And we boiled it down to -- we had 12 plaintiffs from 9 states, and we boiled it down it to -- I had to go through with each of these plaintiffs, “Your name will be out there. You could be accused of being a racist. Do you want to put your family through this? You won’t get it. You probably won’t get any money from this, probably won’t. This is about the principle of the matter.”

 

 And so, we at the Wisconsin Institute for Law and Liberty, whenever I -- right now, we have 40 clients in 17 states challenging these nationwide race-based programs. And I have to go through each one of them and say, “Look, you’re probably not going to get any money. You could be on the news. Is this principle really important for you?” And we do get many, many clients who are willing to put their nose out there. We have a case, the restaurant case -- we had clients in six states.

 

We have a case now against a private company, Comcast, where we have—we can talk about maybe in a different program—but we have a 1981 case against Comcast, where we had multiple states, four states, clients. But yeah, that is an issue. Finding a plaintiff is always a huge issue, especially from us, the nonprofit world, where we’re not -- we’re sort of the only game in town because there’s not really private attorneys who are willing to take these cases on because they have to put food on their table, and they have to bill hours, and you can’t really bill hours in these cases.

 

The good development so far has come in the form of a New York Times article, which, if you read down towards the end of it, it says that the Biden administration is “worried that using race to identify and help disadvantaged communities could trigger legal challenges that would stymie their efforts.” After specifically noting victories by the nonprofit law firms, it said that The Times reported that the administration will now “step away from race.” I thought that was great. I think that’s a pat on the bat for all nonprofit law firms that engaged in this litigation. And I think that’s fantastic. I’m not sure I believe them, that they’re going to step away from race, but I’m hopeful that at least they’re looking over their shoulder. So that’s a good development.

 

I’d say the challenges for litigation in the future here are dispersed responsibility—the idea that there’s federal money that’s given to the states, that’s given to state agencies, that’s given to the local governments. And as I went through the Maryland example of this funnel of federal money going to the state, when you, Will, or I look at a lawsuit, we kind of want -- what’s the biggest bang for the buck? And you know, suing Tom Vilsack or suing the SBA or suing Joe Biden, that’s a lot of bang for the buck. But suing some smaller agency on some very tiny program, it wouldn’t have the presidential effect. It wouldn’t shut down the whole shooting match. It would just take out a separate and arrow.

 

So we got this dispersed responsibility issue. We’ve got dispersed policymaking. As I said, the feds gave responsibility to the states, and the states could choose in the homeowner program how they wanted to discriminate or not discriminate. And so, you have to investigate each state and figure out what they’re doing. We’ve got dispersed victims. So the Homeowners Assistance Fund -- I was looking for clients. And one of the things I needed was I needed a family of four that was white that made between $80,000 and $100,000. And so, try to find that plaintiff. If you’re in the business that we are, we seek plaintiffs a lot of times. We do have people come to us, but we like to develop our own plaintiffs.

 

And going out to find those people, “Do you make between $80,000 and $100,000, and are you white and you have four people in your family? And do you live in Eau Claire, Wisconsin?” is a lot different than going on a blog and saying, “Hey, are you a white farmer?” We’ve got lots of white farmers that were willing to sue, but it’s very hard to find these different victims with standing.

 

We also have the problem of race proxies, which is coming out with Justice40 right now. So Justice40 is all couched in terms of, “We want to help people in these underserved communities. Wink, wink.” And so, it’s going to be hard to prove whether it is a race proxy or whether it’s actually a legitimate policy goal. Look, there are poor areas in America, and we want to help those poor areas and areas that are underserved and areas that need help. And you shouldn’t have to live in an environmentally dangerous place just because you’re poor. We should support those policies. But the policies where we’re using geography as sort of a wink and nod to racism, we don’t like that. We’re going to have to try to find a way to root that out. That’s difficult.

 

We have diffused discrimination. We have a little bit of discrimination here and a little bit here, and what’s the cost and benefits of suing over that? And then we have these programs that have sort of a setup for future discrimination. Like a lot of the bipartisan infrastructure plan, if you search for the word “study,” the word “study” is throughout there. And what they’re doing -- so again, this goes back to what I said at the beginning—this is about systemic racism, right? And when you play the game of systemic racism, you have to find the racial disparities—this is the game that you play. And so, under the bipartisan infrastructure plan, they have study after study after study to find the disparities. And so, although there might not be a case today, there might be a case in two years where an agency found a disparity under the bipartisan -- and then they’re going to remedy the disparity by doing discrimination, which is illegal. But finding the disparity is no big deal, obviously. But remedying it is the problem.

 

William E. Trachman:  Well, that’s a good way to segue into the questions. We have quite a few questions. Just a reminder, if you have a question, you can type it into the box now. We are going to try to tackle a lot of these. The first question is about the Equal Access to Justice Act, or EAJA. You mentioned that when you’re talking to plaintiffs, you have to give them an idea that they’re probably not going to get any money and that they’re going have their name in the papers. Is EAJA a source of legal fees that can act as a deterrent for race discrimination in federal policymaking? Does that threat work when these agencies are looking over their shoulder?

 

Daniel Lennington:  I have not looked into EAJA. When we have sought attorney’s fees, it’s been against state actors under 1981. But I have not successfully found possibility of getting federal attorney’s fees. But that’s something we continue to look for. So I’m not as familiar with the EAJA as maybe other people are.

 

William E. Trachman:  Well, what’s interesting is that even on these farmer rancher cases, the cases are not over yet. Right? They continue. They’ve been enjoined. But we don’t have a final judgment yet on the farmer rancher issue.

 

Daniel Lennington:  Yes.

 

William E. Trachman:  The next question is from Randy Pate. The question is, “What about agency regulations that are justified on a purported alleged racial impact of an existing policy?” So if the existing policy is alleged to have a disproportionate impact on racial demographic groups, can they repeal that policy as part of their justification for rebalancing the playing field? Or could this be challenged? And if a future administration reinstates the old plan, what additional justification would be needed? Do you have a reaction to that?

 

Daniel Lennington:  Yeah. I mean, where I’d start right off the top is the plaintiff. Who’s harmed? So if a repeal of a policy’s going to cause a harm to someone and then you say that harm was because of my race—if I wasn’t this race, then I wouldn’t be harmed—then I think you would have a good start. Right? But then the government would have to prove that it was trying to remedy a specific episode of intentional discrimination the government had a hand in. Now, that hypo sounds like a lot of disproportionate impact talk. And disproportionate impact is not necessarily going to get you there. You need the intentional discrimination. Somebody did a bad thing with a policy, and it hurt someone, and you can remedy that. But just a racial disparity, a disproportionate impact to societal discrimination, is not going to get you there. So it would depend on what exactly was going on in the policy.

 

William E. Trachman:  Next question is from Dan Marinoff (sp) that questions my reference to reverse incorporation, which was recently discussed in a concurring opinion by Justice Thomas, I think, in the Puerto Rico social security case, where Justice Thomas said, “Actually, it might not be reversing corporation. It might the Citizenship Clause that binds the federal government from race discrimination.” Have you, as an entity at Wisconsin Institute for Law and Liberty, thought about including alternative bases for equal protection arguments, like either the Privileges or Immunities Clause or the Citizenship Clause?

 

Daniel Lennington:  Yeah. I’ve thought about that. I mean, I think as FedSoc members, we probably struggle the most with equal protection because there’s no Fifth Amendment Equal Protection because our country would be a lot better and a lot more legally cogent if there was just a straight-up Equal Protection Clause that we could point to. So we have to rely on due process when we’re dealing with the federal government. And we get a lot of decisions that try to grapple with that issue. So I’ve read the book, the recent book—or maybe it was Randy Barnett—about privileges or immunities in the Fourteenth Amendment. I read that.

 

That’s very interesting, but what we have here is we have a mountain of intentional race discrimination by the federal and state government. And they can’t do it, and they do it anyway. And they thumb their nose at us. And we don’t really need anything fun or exciting or new. We just need to get them to stop it and knock it off. But I don’t discredit the idea that there could be other sources for equal protection. I think we have enough right now.

 

William E. Trachman:  Next question is from Timothy Harker, asking whether Appalachian whites could apply for grant money and challenge denials maybe if they’re socially disadvantaged in an objective sense. “That’s a discreet and insular minority,” he says, “that has suffered grievous injustice. Is there an equal protection problem that they can’t be included in the definition of socially disadvantaged?”

 

Daniel Lennington:  Yeah. So the government would say, “Yeah, those people can be included,” because the socially disadvantaged works like this, it says, “Anybody who’s experienced ethnic or racial prejudice is socially disadvantaged.” That’s paragraph number one. Paragraph number two is, “These races are presumed to be socially disadvantaged.” And it lists a bunch of races. But, by the way, if you’re Afghani -- if you’re from Afghanistan, if you’re Pakistani, if you’re Iranian, if you’re Iraqian, Saudi Arabian, if you’re from Syria, you’re excluded. If you’re Turkish, you’re excluded. If you’re from North Africa, you’re white, by the way.

 

So these archaic definitions of who is socially disadvantaged, they don’t make any sense. If you’re from East Timor, you’re not socially disadvantaged either. So yeah, you have these automatic lists of people who are socially advantaged. And then it says—like if you’re Appalachian—if you’re not on the list, you can petition. You can, I guess, send a letter to the secretary of the department for what you want the advantage. And you explain how you, as a person, are socially disadvantaged.

 

But what has been said in case after case is that, “Look, this listing of races who get the presumption, that’s the discriminatory thing.” And you can’t really tell a person to go write a letter if they want to get on the list. That’s discrimination in and of itself. So yeah, people from Appalachia have lower incomes, in general, than African Americans in America. And so, yeah, they could make out a case for ethnic or social disadvantage. But again, the whole system is the problem. The whole system of how we do this is the discriminatory thing. We should treat everybody as individuals and not members of groups.

 

William E. Trachman:  You just reminded me of a question I got a lot last year in the farmer rancher cases, which is, “Why can’t your clients self-identify as a different race?” Okay, so her history is Scandinavian, but in a sense, we’re all Native Americans. Or maybe based on the fact that it’s become to self-identify in other contexts, why not self-identify as black in this context? What do you say when you get that question? “Well, it’s open season on race, and there’s no reason why people can’t just change their race.”

 

Daniel Lennington:  I just say, don’t fall into the trap. And Justice Scalia said the Constitution protects persons, not groups. Right? Persons, not groups. The Constitution’s about persons. We don’t have a constitution for groups. So we have to reject, reject everything that treats people as members of groups and brace the determinations of individuality, which, if the USDA had done and had determined that individual farmers and ranchers were discriminated against, they could have and should have used that $4 billion to fix the problem that they created. Instead, they’re victimizing a whole group of other farmers instead of fixing their own problem, which really is offensive to me. So yeah, I say embrace individuality and embrace the idea that the Constitution protects persons, not groups.

 

William E. Trachman:  What about the idea that a victory in some of these cases could trigger massive amounts of spending on the part of the government? So a $4 billion program that’s applied to nonwhite farmers and ranchers could become a $100 billion program if a court decided, “Okay, there is really an equal protection program. Everyone gets the benefit.” And that’s not an outcome that necessarily is positive for a lot of clients that want to see government shrink or see spending go down.

 

Daniel Lennington:  Yeah. That’s a question of remedies. And I’m not offended by that question. We had that question at WILL when we brought these cases because the actual farmer loan forgiveness does not say $4 billion, it says “all the money that’s in the Treasury” or something crazy like that. So yes, hypothetically, it could create this. But Congress caused the problem. Congress can fix the problem. We hear that from the Supreme Court. We heard that a lot from Amy Coney Barrett in the last few days. Yeah. Congress can fix the problem if they create an unlimited spending issue. So I’m not too worried about that. I would rather just get an order stopping the discrimination and settle out on the remedy later.

 

William E. Trachman:  Yeah. Next question is about keeping plaintiff identities secret. Have you considered suing on behalf of a membership organization, something like what’s been done in the students for fair admission case against Harvard and the University of North Carolina? That way, the individual identities of the plaintiffs are not revealed.

 

Daniel Lennington:  Yeah. You could do that, and that’s been done in the Clean Air context. There was a group that was anonymous that sued EPA and won several times. And so, yeah, that is definitely possible to start an association and sue that. From my perspective and probably from Mountain States Legal is that we have clients who do this for the right reasons. And they have very passionate feelings, and they want to tell their story. I think you guys represented Liesl Carpenter from Wyoming, a rancher. She’s got a fantastic story about her case. My client Adam Faust is a double amputee, a dairy farmer from Chilton, Wisconsin. He went on Fox News and told his story. It personalized it.

 

So yeah, I have considered associations, but those are -- I like individuals better because they can tell the story, and they tell the story better than me because they have been victimized by their own government, and they want everyone to be treated equally. And they can explain that in a layman’s sense a lot better than an attorney can.

 

William E. Trachman:  Yeah. We’ve got time for one or two more questions. The next question’s from Steven Bradbury asking, “With so many liberty-minded nonprofit groups here that are suing, have we given thought to bringing all of these organizations together in a single coordinated effort to divide up a number of programs?” So I’ll just gloss on this. I think we had 12 lawsuits on the farmer rancher case, but maybe we’ve missed some other opportunities because we’ve all been busy on the obvious case. So what’s your reaction to that question?

 

Daniel Lennington:  Yeah. Well, with the state policy network and other -- Andrew Lane and different national groups, we work together. And I think there’s definitely friendly competition, but it’s not bad. And if I had extra clients, I’d give them to you and vice versa. And I think there’s a lot of sharing that goes on. Especially when I want to go out to another state, want to sue in a different state where I’m not barred or I don’t have a federal admission, I can call you, Will, and say, “Hey, Will, we’re going to something in Colorado. Can you help me get pro hac vice out there?” And you’re going be happy to do that, and I’m going to be happy to do it in Wisconsin when you have a case. So I think we work well together.

 

And we all have regional interests in things like things you’re doing in Colorado that I don’t necessarily care about. And I’m doing stuff in Wisconsin that you don’t necessarily care about. So you can give the attention to the state and give the national attention, too, which I think is great for this model. And I think it’s working great.

 

William E. Trachman:  Yeah. All right. This might be our last question from GianCarlo Canaparo. You mentioned at the very beginning, the Restaurant Revitalization Fund was about $28 billion or so. And there was a tally that that was probably about the amount of money that nonwhite restaurant owners would need for their subsidies. Where did you get that? Is there a site for that? Did you figure that out? Did you do the math yourself? Because that seems like a very concrete data point to say, “This was intended to discriminate against Caucasian Americans.”

 

Daniel Lennington:  I don’t have it at my fingertips, but I saw in a Senate or House report on the needs -- on the needs of restaurants broken down by race.

 

William E. Trachman:  Got it.

 

Daniel Lennington:  Yeah. I don’t have it in front of me, but that’s where I saw it.

 

William E. Trachman:  Well, this has been a terrific hour. Thank you so much to Daniel Lennington for speaking to us. We successfully avoided the confusion between my name, Will, and the Wisconsin Institute for Law and Liberty, so that’s a victory in and of itself. Ryan, do you want to take us out?

 

Ryan Lacey:  Absolutely. Thanks so much to both of you. On behalf of The Federalist Society, I’d like to thank what Will and Daniel for the benefit of their valuable time and expertise today. And I want to thank our audience for joining us and participating, especially with those great questions. We welcome listener feedback by email at [email protected]. And as always, keep an eye on our website and your emails for announcements about upcoming webinars and other programming. Thank you for joining us today. We are adjourned.

 

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