Professor George La Noue joined us to discuss his recently published article, “The Race Card in ARPA’s Food Supply Deck,” published by the Federalist Society Review on July 12, 2021. In his article, Professor La Noue discused the American Rescue Plan Act of 2021, which appropriated $1.9 trillion, $28.6 billion of which would be administered by the Small Business Administration. Since passage, numerous lawsuits have been filed against the SBA on Fifth Amendment grounds alleging unconstitutional sex-based and race-based discrimination. Other suits have been filed against the United States Department of Agriculture for an allegedly unconstitutional loan forgiveness scheme on the same Fifth Amendment grounds. Read Professor La Noue’s analysis of the arguments and country-wide pending litigation is here.
- Professor George La Noue, Professor Emeritus of Political Science and Professor Emeritus of Public Policy, University of Maryland Baltimore County
- Moderator: Hon. Kenneth L. Marcus, Founder and Chairman, Louis D. Brandeis Center for Human Rights Under Law
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Evelyn Hildebrand: Welcome to The Federalist Society's virtual event. This afternoon, August 26, we're hosting a fireside chat with Professor George La Noue to discuss his recently published article titled "The Race Card in ARPA's Food Supply Deck." My name is Evelyn Hildebrand, and I'm an Associate Director of Practice Groups at The Federalist Society. As always, please note that all expressions of opinion are those of the experts on today's call. Today, we are fortunate to have with us Professor George La Noue, who Mr. Ken Marcus will introduce. Mr. Ken Marcus will moderate our discussion this afternoon.
By way of a very brief introduction, Ken is the Founder and Chairman of the Louis D. Brandeis Center for Human Rights Under Law. He is the former Assistant U.S. Secretary of Education for Civil Rights, and he's currently the Chairman of The Federalist Society's Civil Rights Practice Group. So we're very pleased to welcome both Ken Marcus and Professor George La Noue for this afternoon's discussion.
After our speakers give their opening remarks, we will turn to the audience for questions. If you have a question, please enter it into the Q&A feature at the bottom of your screen. We will handle questions as we can towards the end of this afternoon's program. You may enter a question at any time, however, so you don't need to wait until the end to enter a question. With that, thank you for being with us today. Ken, the floor is yours.
Hon. Kenneth L. Marcus: Thank you, Evelyn, for that kind introduction. Two other credentials I might mention: one is that I'm honored to be a former colleague of Professor George La Noue, having had the privilege of working with him when he was one of our lead experts for the U.S. Department of Education's Office for Civil Rights during the George W. Bush administration. He provided invaluable support to the work that we were doing to examine race-neutral alternatives to racially preferential affirmative action.
Additionally, I'm also proud to say that I am a former co-author with Professor George La Noue. I had the pleasure, several years ago, of co-authoring with him an article on serious considerations of race-neutral alternatives in American higher education. That appeared in the Catholic University Law Review. And since it discussed, in detail, the work of former Justice Sandra Day O'Connor, we also had the disquieting experience of presenting it in front of her at an event at Catholic University.
Well, this is an event I've been looking forward to. I'm glad to be able to share Professor George La Noue with those who are less familiar with his important work. But, beyond that, I'm glad to be able to share with a broader audience a story that I think is not told enough, which is two-fold. One, it has to do with the aggressive use of racial preferences by Congress. We think, a lot nowadays -- I believe -- about the increasing aggressiveness of civil rights activists, and critical race theory, and affirmative action in higher education. But there are other stories to be told about equally or more aggressive uses of racial preferences in other areas, like small business or agriculture.
The other part of the story, though, is about the way in which conservative and libertarian lawyers have been able, through strategic litigation, to address them, and to address them with considerable vigor. So this is, then, a story that I think needs to be told. George La Noue is a great person to tell it.
George is Professor Emeritus of Political Science and Professor Emeritus of Public Policy at the University of Maryland, Baltimore County. He served as a trial expert in 20 cases involving public procurement preferences. For 30 years, he was Director of the Project on Civil Rights and Public Contracts at UNBC which contributed 289 contracting disparity studies recently to the Library of Congress. He's been a consultant to nine governments—a trial expert in 30 cases where the validity of disparity studies was at issue. Professor George La Noue, we are very pleased to have you with us today.
Prof. George La Noue: Thank you, Ken. It's great to be working with you. And thank you to Evelyn for arranging this, and to The Federalist Society, which is an important vehicle for discussing these complex issues. One reminiscence that I recall, that you alluded to, was when we jointly presented our paper on race-neutral alternatives and were discussing Croson. Justice O'Connor was very graciously sitting in the front row. And it's intimidating to critique and evaluate a decision with a Supreme Court justice sort of sitting ten feet from you. And she was a very gracious lady and it was a wonderful opportunity that we both had. I appreciate that memory.
Hon. Kenneth L. Marcus: She was very gracious indeed. I'm not sure that she expected the degree of criticism that she received, but was very good-humored, and, as you put it, gracious about it.
Prof. George La Noue: Yes.
Hon. Kenneth L. Marcus: George, you've made major contributions to various areas. I think that you are the expert on the issue of civil rights in government contracts. You have made, and continue to make, significant contributions to the study of civil rights and free speech and academic freedom in higher education. Tell us, what is it about the federal bailout legislation that you describe in "The Race Card in ARPA's Food Supply Deck"? What is it about this that drew you in to write this important new article in the Federalist Society Review?
Prof. George La Noue: Thank you. The reason that I wanted to investigate this is partly because it's not been covered well. There are so many other news events that are overwhelming this story. But it's an important issue because it is the most -- the ARPA race preferences represent the most overt and aggressive use of race preferences in the history of federal legislation. And the widespread judicial response to them, which has rejected them, is also very unusual.
When you look at the history of federal race preferences, there have been several programs—the Federal Small Business Administration's 8(a) Program, which provides contracts to socially and economically disadvantaged contractors, which are then defined racially and ethnically; the Small Disadvantaged Business Program, which uses slightly different techniques to get contracts to this same group of socially and economically disadvantaged contractors; and the Disadvantaged Business Program, which uses, again, the same concept of socially and economically disadvantaged persons.
All of these programs depend on a particular definition of who is socially and economically disadvantaged, which is race and ethnically based, so that when the ARPA legislation, which was signed by President Biden on March 11, 2021 -- so, you can see how fast from the time of inauguration to the time of signing this legislation, this process went forward. And the intention was to create benefits for particular racial and ethnic groups. There was very little, very little time to redesign what had been the precedents.
So, the socially and economically disadvantaged concepts were simply imported into two revisions in the ARPA programs. And when I saw that that had happened and I began to read that the courts were rejecting this approach, it seemed to me that the issue was not just what might happen to the ARPA provisions, but what the implications were for other federal programs which were based on the same socially and economically disadvantaged concepts.
Hon. Kenneth L. Marcus: Good. Now, of course, when we're talking about ARPA, we mean the American Rescue Plan of 2021. I take it that there were probably two aspects that especially interested you in ARPA—the one provision dealing with restaurants, and the other with, with agriculture. Could you give us a little bit of the context and the way in which race was considered, especially in the small business administration? Give us a context to what we were looking at, especially on the restaurant side.
Prof. George La Noue: Okay. There isn't any question that the restaurant business writ large. The legislation includes not only traditional restaurants, but really food servers of various kinds. And they were hurt badly by Covid. Many of those businesses had to be shut down entirely. Others could serve only customers on a very limited basis and they had to lay off huge numbers of workers. And so Congress, in its relief efforts, appropriately addressed the problems of that industry. But when they chose to do so, they chose to create a situation where only some restaurant owners could apply during what was called the priority period.
They set a 21-day priority period for application. And you could apply if you were a woman-owned business, a veteran-owned business, or a socially and economically disadvantaged business. If you were a white, non-veteran restaurant owner, you could not apply for these relief funds during the priority period. And the problem was that the amount of money that Congress appropriated was nowhere sufficient to the need in this area. And so there was a great danger that the money was going to run out before any white, non-veteran restaurant owners could possibly apply. And that was what set up the litigation.
Hon. Kenneth L. Marcus: Before we get to the litigation, maybe you could talk a little bit more about these preferences and who got the preferences. It looks to me as if there is a remarkable list of groups of individuals who would get the preferences and a small group who would not. It appears, perhaps, that there was an effort to give preferences to people from the Far East, but not the Middle East; to Hispanic Americans, including white Hispanic Americans, but black Americans and not white African Americans. It looks like Pakistan is included, but refugees from Afghanistan are not. Is there any rhyme or reason to the list of people who get preferences and those who do not?
Prof. George La Noue: Well, the list is a fascinating and rather nonsensical list. And it was created -- this has been an area of research that John Sullivan and I have pursued. We wrote an article in the Journal of Policy History about it. And essentially, what happened was that Congress laid out, in broad terms, who would be considered a minority, and then various bureaucrats -- probably five or six of them -- created this list. And once this list was created, then it became kind of locked-in, in all forms of legislation. It's in the 8(a) Program, the STB Program, the DBE Program, and now in ARPA. And you as you suggest, the list is strange when you look at it. But here's the important thing; it had never been judicially challenged until -- we'll talk about how it has been.
But looking at the list, for example, the first category is black. And then in parentheses, it says, "A person having origins in any of the racial groups of Africa." And you and I were talking earlier that anthropologists now believe that we're all -- our origins are from Africa. But the reason why it's worded in that way is to exclude North Africans and to exclude white settlers in South Africa or Asia or someplace.
The second category is Hispanic. Then it says, "Persons of Mexican-American, Puerto Rican, Cuban, Central or South American, or other Spanish or Portuguese origins or culture." Now, Spanish and Portuguese persons are white, and are not -- there's no demonstrable evidence that they are any more disadvantaged than Italians or Corsicans or other people.
Then there's Native Americans. And that is a group that has fairly clear definitions. But then there's, finally, the category of Asian Americans. And then it really gets strange. It has the large groups that you would expect, but then it has the American Trust Territory, the Pacific Islands, the Republic of Palau, the Republic of the Martial Islands, the Federal States of Micronesia, the Commonwealth of the Northern Mariana Islands, Samoa, Kiribati, Tuvalu, Nauru. I mean, it just -- it doesn't define Asia in the way that normally Asia is defined. And specifically, it excluded Afghanis and some other -- the new Asian Republics -- the post-Soviet Republics are excluded from this.
So, you had this list that was the core of all of the federal race preference programs that just got incorporated into ARPA because it was available in the very brief time that ARPA was put together. And now that definition of who is socially and economically disadvantaged is in both the restaurant program, which we'll discuss in detail, and the USDA program. And now it is being challenged. And to get ahead of our story a little bit, it doesn’t do well when judges begin to look at it.
Hon. Kenneth L. Marcus: And just one example -- if you were from the Pashtun tribe in Central Asia, would you get the preference or would you not get the preference?
Prof. George La Noue: Well, the Pashtuns are the largest tribe in Afghanistan—I think 48 percent of the population—but they're also a huge part of Pakistan. The current president of Pakistan is a Pashtun. So if you're a Pashtun who is living, at least temporarily, in Pakistan and has Pakistani citizenship, you -- and you came to the United States and became an American citizen -- if that was your origin, you would be eligible. You would be socially and economically disadvantaged. On the other hand, if you were a Pashtun who lived in Afghanistan and came to the United States and had citizenship, you wouldn't be included. And it just doesn't pass any kind of a facial test to say, "Well, Pashtuns on one side of the line are socially and economically disadvantaged, but not on the other side of the line.
Hon. Kenneth L. Marcus: Okay. Quite a -- only Congress and the federal government could come up with that. So, tell us a little bit more about this program and how the legislation was challenged in the courts.
Prof. George La Noue: Okay. What Congress did was to provide -- I think it's 26.8 billion, but I might be a little off on that -- for restaurant relief. Well, there are 660,000 restaurants in the United States. There are 40,000 restaurants owned by Chinese-origin people and 40,000 by Mexican-origin people. So, you see right away, you’ve got huge numbers of potential claimants for a very limited amount of money. And when, in a very short period of time, the Small Business Administration was overwhelmed with requests for relief -- within the 21-day priority period -- but white, non-veteran restaurant owners were not permitted to apply during that permit -- that period. And so the great likelihood – certainly, the courts found -- was that they might not get any money at all even though the financial condition of their business—the suffering they had endured because of Covid—was exactly the same as the people who were going to get the money.
So a number of restaurants challenged this. And when I say restaurants challenged it -- one of the important things in this story is that, while litigation in other areas regarding federal preferences has largely been financed by individual businesses or business associations, the legislation -- the litigation challenging ARPA has been brought by interest group agencies. And we'll discuss that later. But the first case to be brought, which was brought by the Wisconsin Institute for Law and Liberty, is called the Vitolo case. And that case went to -- was brought in Tennessee. And the district court judge found that the various comments in the congressional record about the severity of Covid and the problems that the industry faced were sufficient that there was a compelling interest for the preferences and the -- what's called RRF, Restaurant Revitalization Funds.
Then, WILL faced a difficult situation. They had brought the case. They had lost it at the district court level, so then they decided to file an emergency motion for an injunction, pending an appeal, and to expedite that appeal to the Sixth Circuit. And I describe this as sort of a -- the equivalent of a Hail Mary football pass since the Court was being asked to interrupt its current appellate calendar to render an immediate opinion on an extremely important constitutional issue involving billions of dollars. And courts don't like to be put in that position. There wouldn't have been a complete record. But the Sixth Circuit panel accepted it and then the outcome of that case is extremely important.
Hon. Kenneth L. Marcus: Please tell us about it.
Prof. George La Noue: The formal name of the case is Vitolo, V-I-T-O-L-O, v. Guzman, G-U-Z-M-A-N, Guzman being the Small Business Association -- Small Business Administration person who is administering this. The Sixth Circuit was divided. The two-person majority—Judge Amul Thapar and Allen Eugene Norris—saw the immediate need for hearing the case since the key to getting a grant -- I'm quoting them -- "The key to getting a grant is to get in the queue before the money runs out." And they found that the case was not moot because there's a real risk that the RRF funds would run out before the Vitolo application could be processed.
And in fact, the SBA reported that nine days after applications opened, more than 260,000 businesses had applied for relief funds for more than 65 billion -- almost twice the amount that Congress had appropriated. So the Court was realistic that if this case couldn't be heard, white, non-veteran restaurant owners simply -- it would be too late.
So the majority, then, looked at the four factors for considering a preliminary injunction and came to the same conclusion as an earlier Texas court decision had. And here's the key point—they said that in evaluating the likelihood the plaintiff would win on the merits, the majority noted that Croson holds that governmental racial classifications cannot rest on "generalized assertions that there's been past discrimination in an entire industry. The evidence must be of intentional discrimination." It must consist of active or passive governmental discrimination. And the government didn't have any of that. And the majority found that the SBA rules were based only on allegations of societal discrimination, which is not of sufficient compelling interest.
So the government lost on the compelling-interest prong of strict scrutiny. They also lost on the narrow-tailoring prong. And I think the -- their loss there is perhaps the most significant. And here it goes back to the use of the category of socially and economically disadvantaged, which was the category that determined whether, on racial terms, you had a -- were in the priority or you weren't. And Judge Thapar, who wrote the majority opinion -- who is, I should say -- has an interesting background. He's the first federal judge of South Asian origin in American history. And he asked a question that, perhaps, was more keenly on his mind than it had been on some other judge's mind. But he said that looking at the SBA list -- which we've talked about -- there were preferences for Pakistanis, but not for Afghans; Japanese, but not Iraqis; Hispanics, but not Middle-Easterners. And he said, "None of this is supported by any evidence in the record."
Now, there isn't any good answer to the Judge's inquiry, just decades of bureaucratic repetition. It just got passed from one kind of legislation to another kind of kind of legislation without any review in Congress or in the courts. And what's significant about this is that it now can be expected that the question of why one group but not another group is going to be given racial preferences, is always going to be in court cases, and it will be asked of government witnesses -- and that these cases are going to be brought more frequently, now that the court has raised it.
So, the Court found -- the majority found that the government had neither a compelling interest nor had narrowly tailored, and there was one dissent. And the dissent, I think, is very interesting. Judge Bernice Bouie Donald dissented, and she said, "It took nearly 200 years for the Supreme Court to firmly establish that our Constitution permits the use of race-based classifications to remediate past discrimination, but it took only seven days for the majority to undermine that long-standing and enduring principle." And then she went into what is -- I think is a fundamental issue in these cases; that is the difference in viewing the government's role as one of creating equity, which means distribution of resources to groups based on their population, or equal protection, which means that individual persons are entitled to protection and can't be discriminated against in order to favor one group over another.
But Judge Donald, in dissent, said, "The appellate majority's reasoning suggests we live in a world in which centuries of intentional discrimination and oppression of racial minorities has been eradicated and that the Covid-19 pandemic did not exacerbate those disparities." She thought that the congressional testimony created a compelling interest, and she was particularly annoyed because the appellate Court's unusual procedure in handling this appeal. "We are now left with a binding published decision," she said, "etched in the stone of time." So the consequence of the Sixth Circuit's opinion is that there is a precedent. And then the Small Business Administration had to decide -- and the Justice Department had to decide -- what to do.
And they decided not to appeal. There are various reasons for that, but the consequences of not appealing is that the priority system had to be dismantled. And it was a messy process because by the time the Sixth Circuit decided, a number of firms in the priority program had either gotten money or had been promised they were going to get money. And now the SBA is saying, "No, we can't do that anymore. We're going to have to have to process applications of white-owned restaurants that were excluded from the priority period first."
So, you have an initial race-based and sex-based priority and now you're reversing it in order to compensate. And the restaurant industry is not happy with this because there's not enough money to go around. Restaurants that thought they were getting money are not going to get money. And so I think it's fair to say that the government has created quite a mess in this area.
Hon. Kenneth L. Marcus: What a disaster. George, now, if we could, let's turn now to the Department of Agriculture. The USDA's debt relief was another part of the same bill. Tell us about that aspect of the legislation.
Prof. George La Noue: It's called Section 1005(a)(2), and essentially, what it is composed of is a debt relief program. Farmers have to borrow money during the period before their crops are harvested and to invest in equipment and other kinds of things, and they borrow it from the Department of Agriculture. And the Department of Agriculture -- and in cooperation with the House Agriculture Committee and with the Senatorial sponsors of Senator Booker and Senator Warren -- had created this program that, socially and economically -- and there's that term and that category again -- farmers would be entitled to debt relief up to 120 percent of what they owed, which is -- I don't know how you come up with 120 percent. I think lots of people would like to borrow money and then have -- get 120 percent back.
Hon. Kenneth L. Marcus: An extraordinary deal.
Prof. George La Noue: Yeah. Yeah. And what is significant about this is not just the terms of the program, but the justification for the program. According to the Administrator of the Farm Services Agency, all socially disadvantaged food producers -- and we're talking here about farmers and ranchers -- have faced "systemic discrimination, with the cumulative effects that, among other consequences, led to substantial reduction in their numbers, reduction in the amount of farmland they control, and contributed to a cycle of debt that was exacerbated during the Covid-19 pandemic."
Agriculture Secretary Vilsack testified before the House Committee on Agriculture that the USDA would forgive 13,000 to 15,000 loans to non-white food producers, and that might cost up to $4 billion. And then the administration of the program is particularly interesting, and I think made judges a little nervous. Under this new debt relief program, food producers were encouraged to update or submit new race and ethnic identification to their local USDA Service Center so that checks could be sent out quickly to them, although socially disadvantaged persons did not actually have to apply for loan forgiveness. These persons merely had to review and sign a letter mailed to them from the Farm Service Agency verifying the amount of their debt and their race or ethnicity. They did not have to prove any previous discrimination.
Now, Secretary Vilsack could have used the emergency that Covid created as an excuse for expediting these checks, but instead, he used another rationale. And I think this is significant. He said the urgency was created because "prior effects to remedy specific individualized discrimination failed to do the necessary work needed to address systemic discrimination." He said that food producers who are white, however, could not have their debts canceled, regardless of their individual circumstance or the effect of Covid on their business. And the USDA announcement said the Biden-Harris administration is committed to -- "to equity across the department by moving systemic barriers and building a workforce more representative of America."
That's the classic equity agenda—that if you have a workforce that isn't somehow representative, you need to -- government needs to intervene in favor of groups that are somehow underrepresented, even at the point of excluding other individuals who have faced the same unfortunate pandemic situation or other kinds of situation. So that, naturally, triggered some lawsuits.
Hon. Kenneth L. Marcus: Yeah. One can imagine, given this use of race -- based on that sort of justification. Tell us about the litigation.
Prof. George La Noue: Well, again, the Wisconsin Institute for Law and Liberty represented a class which grew to a dozen farmers in nine states. And that's one of the significant differences of this kind of litigation. You're not talking about an individual firm that lost a contract, you're talking about a much wider group that is faced with a national program that has excluded them. They filed the lawsuit in the Eastern District of Wisconsin and asked for declaratory relief and an injunction. And -- that was on April 29, and by June 10, Judge William Griesbach granted a temporary injunction, enjoining the USDA from forgiving any loans based on race. And his argument is an interesting one.
He began his opinion by quoting, at length, the Vitolo opinion, which had been decided a mere 13 days earlier. So, here's a circuit court case in another circuit, not Wisconsin's, which is Fifth, I think. No, it's not -- it's Eighth. And -- but it immediately, sort of -- and that was about restaurants, but here it goes over into agriculture. And he said -- he cited Croson's precedent, "The generalized assertion of past discrimination in an entire industry does not establish a compelling interest."
He concluded that, aside from a summary of statistical evidence—statistical disparities—defendants have no evidence of intentional discrimination by USDA in the implementation of recent agriculture subsidies and pandemic relief efforts. Furthermore, he found the USDA program was not narrowly tailored, because there was no consideration of race-neutral programs, such as "individual determination of disadvantaged status, or giving priority to farmers and ranchers regardless of race, who had been left out of previous pandemic funding."
A mere two weeks later, Judge Marcia Morales Howard of the Middle District of Florida, in a case brought by the Pacific Legal Foundation, also found the USDA program unconstitutional. And her reasoning, if sustained on appeal, really presents a powerful challenge to all race-based public aid or contracting programs. She argued, "The implementation of Section 1005 will be swift and irreversible" -- meaning, the only way to avoid the plaintiff's irreparable harm is to enjoin the program.
She found that the USDA arguments that a compelling interest existed -- she considered their arguments that a compelling interest existed, but she found "serious concerns over whether the government will able to establish a strong basis in evidence warranting the implementation of a race-based program."
But then she went into new judicial territory. She said, "Even if a compelling interest for this race-based program could be established, it was not narrowly tailored, because it provided relief to all minority farmers, whether or not there was any evidence of discrimination against them as individuals." Typically, in cases involving race-based programs, the issue is whether statistics showing general disparities or other evidence demonstrates that a particular group has suffered discrimination. If the answer is yes, then all members of that group become eligible for race-based preferences. In the segregation era, it certainly didn't matter whether an individual African-American was educated, affluent, or a successful entrepreneur. All still suffered from racial discrimination. But in the 21st century, that argument can still be made, but it's harder to prove.
And in this case, the judge suggests that, okay, even if you come in with statistics showing that there's a general disparity, doesn't mean that every member of that class has been discriminated against. And be narrowly tailored, you have to have a remedy that affects only those individuals that have been discriminated against.
So, the USDA has announced that it will appeal these two decisions but it is also asking for a delay in the proceedings. It will probably supplement the generalized statements about systemic discrimination and inequity in agriculture with some more details in the multiple ongoing litigation. But that's going to be difficult. There is no relevant agricultural disparity study -- certainly not one that encompasses the number of racial and ethnic groups benefitted by this program. Courts have not been sympathetic to widespread governmental reallocations for discrimination.
Hon. Kenneth L. Marcus: Are you pausing because there's a question from the audience? If so, I will -- I’ll read it for you. A viewer wants to know if farmers were advised to update their race, was it required to prove parentage or was it only needed to state -- was it only required that someone had to state whether they are black, Asian, or Native American, or --?
Prof. George La Noue: You simply have to assert that identification on a form. You don't have to prove anything about your parentage, and you certainly don't have to prove you were discriminated against.
Hon. Kenneth L. Marcus: I don't know if you had anything further that you wanted to say about the -- either the litigation or the status of this program within the Department of Agriculture before I ask you a more general question or two?
Prof. George La Noue: It’s just on pause -- excuse me, the litigation is just on pause as the Department of Justice attempts to get more time to put its case together. I think they face a difficult question. They're being sued. There are class-actions. They're being sued in multiple jurisdictions. And I want to discuss the long-term significance of these cases and the problem that the government faces in defending, in a moment.
Hon. Kenneth L. Marcus: Well, I would invite you to do that because I think that there are real questions beyond these two programs—beyond the restaurants, beyond the farmers. What should we make of these, apparently, very aggressive efforts from the left to increase the use of racial preferences? And what should we make of the use of the law in the courts to block these efforts in the name of equal protection?
Prof. George La Noue: Well, let me come to those questions in my concluding remarks. It's never possible to be certain about the trajectory of judicial doctrine, particularly when the relevant cases are only a few months old. Most of the rulings are preliminary injunctions with only one circuit court opinion and a divided panel, at that. Nevertheless, Judge Thapar -- nevertheless, something important seems to be occurring. Judge Thapar's challenging of the whole concept of racial and ethnic national origin basis for who's socially and economically disadvantaged and who's not, has placed the DOJ in a difficult position.
If it had appealed en banc, the precedents of the Sixth Circuit were not favorable. The majority in Vitolo had also carefully cited the precedents of the Supreme Court. And the DOJ might have believed that the current high court would not be supportive of the use of racial priorities and might have even found the whole race-based, socially and economically disadvantaged concept invalid. Furthermore, the political optics of excluding white male entrepreneurs existing in every congressional district in the country might have been very unattractive.
In any event, as we said before, on June 3, the SBA announced that it was halting its previous race- and sex-based priority payments. The consistent losses in the district courts about the exclusion of white farmers and ranchers from USDA debt relief is also causing the DOJ problems. For now, its strategy, as we've said, is to ask for delays. The Mountain States Legal Foundation in the Tenth Circuit, the Southeastern Legal Foundation in the Sixth Circuit, and America First Foundation in the Fifth Circuit are representing other white plaintiffs challenging the debt relief program in separate cases.
Perhaps the government will find some previously overlooked evidence in the congressional record or produce expert witnesses. But creating a compelling interest for all of the groups, now defined as socially and economically disadvantaged, and arguing that there are no white farmers and ranchers who should be in the preferred category for debt relief, is really going to be a very difficult task. There may also be -- that may also be an awkward position for many candidates to support in the 2022 midterm elections -- that no white farmers or ranchers should be eligible for debt relief.
As Justice Sandra Day O'Connor stated in Croson, "If statistical disparities were defined as identified discrimination, that would give governments license to create a patchwork of racial preferences about any field of endeavor." And that's what has happened here. On the other hand, if DOJ does not successfully defend the current definitions of socially and economically disadvantaged groups, then the use of that concept in other federal programs is jeopardized. And whatever that outcome, the newly energized litigating agencies that challenge the ARPA preferences are waiting for these new challenges. Thank you.
Hon. Kenneth L. Marcus: Sure. We’ve got an interesting question from another audience member. Let me preface it by saying the following: I think someone who is new to this area, listening to the ARPA provision on the Agriculture Department, might think that Congress, the courts, and the Agriculture Department had not previously dealt with the question of discrimination against minority farmers. And yet, this is an issue that has been addressed at considerable length for considerable time and considerable money.
We have this question from Jack Parr (sp), "USDA settlement of Pigford resulted in payments totaling some $4.4 billion to the disadvantaged farmers who also were helped by ARPA. Did Congress recognize this settlement? Should it have said that it was insufficient?"
Prof. George La Noue: I think that's a very good question. I did not get into the details of the Pigford settlements. But they existed and involved, as the questioner suggests, a great deal of money. And had USDA and Congress had said, "Look there are some identified --." These were all Black farmers. These were not farmers in the total social and economically disadvantaged ethnic and racial group categories. But if they had said that there were Black farmers that had been discriminated against but did not get appropriate Pigford settlements, and that the ARPA legislation was going to address that, it would have been a wholly different situation.
It clearly would have been permissible for the government to have provided relief to a particularly identified group of farmers who had been discriminated against in the past. But instead, the ARPA debt relief program ignored the Pigford settlements. And farmers who had gotten relief from the Pigford settlements were still eligible for 120 percent of the -- whatever debt they owed in the new ARPA legislation. So that is certainly a narrow-tailoring problem. The USDA program was not targeted to individual farmers who had been discriminated against or even individual farmers who had suffered, particularly, Covid damages. It was targeted to all farmers and ranchers who fit the socially and economically disadvantaged category.
Hon. Kenneth L. Marcus: As we consider this story, including the various legal challenges to the bill, do you view this as a story that should inspire hope or despair? Despair, for instance, regarding the extent of the problems created by Congress, or hope, in terms of the bigger and variety of legal challenges and the extent of their success so far?
Prof. George La Noue: Well, that's a very interesting question. Several things seem to have occurred, which are going to direct the future debate on this program. And I regard the debate as reflecting the larger question of whether public policy should be driven by equity redistribution of resources and assets, or equal to groups -- or equal protection to individuals from government's attempts to categorize beneficiaries by race and ethnicity. I think these decisions go and take an important step toward reinforcing the traditional equal protection to individuals and that, so far, the equity agenda of the Biden administration has not been successful. Perhaps a more careful and limited approach may be more successful, but the ARPA legislation was essentially developed in maybe a month-and-a-half.
Another important development is that we now have five litigating agencies -- and maybe others will join -- who have taken on the task of resisting race preferences, and they have been successful. And they are unlikely to quit this field. I think they will become involved, and that's an important change because that means that you have some national perspective, you have multiple litigation, whereas, in the past, you had a particular firm that had been disadvantaged in seeking a particular contract and had to finance the case by itself. And taking on a government agency that is going to be the source of your future contracts is a daunting activity. And so, many firm owners looked at the cost and the length of that kind of litigation and the possibility that whatever government agency they were going to seek contracts from in the future would be very annoyed with them, and had decided not to bring the litigation.
The litigating agencies are not bound by those restraints and they seem very energized and have been successful. So, I think they're going to stay in the field, at least for quite a while. And then there is the question of what's going to happen in the electoral process. What will happen -- let me put it this way—suppose Secretary Vilsack, who defended the equity agenda in the USDA program -- he was the Democratic governor of the state of Iowa for, I think, two terms. Would he have run on a platform of excluding white farmers and ranchers in Iowa from debt relief? I think that's not very plausible, and I think other candidates are going to find that to be a very uncomfortable position to be in. So, the politics of this -- because the ARPA preferences were so visible and so national and, I think, appeared to most people to be an indefensible part of Covid relief -- I think they may play more of a role in electoral politics than these kinds of preferences have played in the past.
Hon. Kenneth L. Marcus: Thank you, George. And please forgive the background noise, as we appear to be in something of an electrical storm at the moment where I am. You mentioned five litigating public interest organizations, and I think you've named some or all of them before. Personally, I think it's remarkable that there are now five public interest advocacy organizations that are actively and effectively challenging this sort of preferential activity and defending the equal protection clause. Equally remarkable is that there are others doing similar work that simply have not been involved in this particular case, but they're involved in other challenges to preferences.
I would like to ask a different question because this was raised by a law student. We have just a few minutes left, so I'm glad to have, in the tradition of The Federalist Society, a law student provide the last question. He says as follows, "Ken mentioned in the beginning about race-neutral alternatives to affirmative action. What evidence would be sufficient for the federal government to prove disparate impacts of the pandemic to satisfy strict scrutiny? How can the federal government balance acknowledging disparate impacts of the pandemic on different communities without resorting to racial categories or racial preferences?"
Prof. George La Noue: That's a really good question. Take restaurants, for example. There is some evidence that restaurants owned by members of minority groups and by women were more affected by Covid shutdowns than other restaurants which were, perhaps, more corporately owned. What the legislation could have done was to define the need for restaurant relief based on the severity of the impact of Covid, both epidemiology and economically, and even picked out various zip codes, and said, "We're going to focus -- we don't have enough money to serve 660,000 businesses. We're going to focus on relief on those businesses in those zip codes that were most impacted by Covid." That would have probably disproportionately benefited minority and women-owned restaurants, but it wouldn't have excluded white restaurants in those same zip codes.
I think that could have been done, and it could have been quite defensible. Similarly, with regard to debt relief, you can define that problem in a race-neutral way. There were some farmers who were really hurt badly by Covid, and other farmers in other parts of the country that were not, or, because of the type of businesses they had, were not particularly affected. You could have done that, too. But the identity politics agenda of some members of Congress and the Biden administration didn't go that way. They did not go toward a race-neutral approach. They went toward a race-conscious approach, and the federal courts have rejected that so far.
Hon. Kenneth L. Marcus: Thank you, George. For members of the audience who missed any part of this, the event will, fortunately, be available both as a podcast through The Federalist Society website, and also as a video that can be seen, I believe, on YouTube. Keep an eye on The Federalist Society website for that and for other sorts of information. I'd like to say, George, that it's been a pleasure working with you now, as in the past, and that I would strongly recommend to viewers who have not yet read your article in the Federalist Society Review, "The Race Card in ARPA's Food Supply Deck," that they go ahead and do so. Thank you, George.
Prof. George La Noue: Thank you, Ken. And to The Federalist Society, I appreciate it.
Hon. Kenneth L. Marcus: Evelyn, did you have --?
Evelyn Hildebrand: Oh, yep, yep. Perfect timing. Thank you very much to Professor George La Noue and to Ken Marcus for this great discussion this afternoon. And thank you to our audience for participating and sending in your questions. We welcome listener feedback by email at firstname.lastname@example.org. Keep an eye on your emails for announcements about upcoming Teleforum calls and virtual events. Thank you all for joining us today. We are adjourned.
Dean Reuter: Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.