Texas Court Blocks Biden's Restaurant Aid Program That Prioritized Applicants Based on Race and Gender

AP Photo/David J. Phillip

Late on Tuesday night, federal judge Reed O’Connor, of the United States District Court for the Southern District of Texas, Fort Worth Division, issued a Temporary Restraining Order blocking distribution by the Small Business Administration of $28.6 billion dollars in grants to businesses in the restaurant industry.

On May 13, 2021, Greer’s Ranch Cafe and owner Phillip Greer filed a class-action lawsuit against the Small Business Administration claiming that the aid program was being administered in an unconstitutional manner because the program was designed by the Biden Administration to give priority to restaurant businesses owned by racial minorities and women.

Biden’s plan requires the SBA to give first priority to women, veterans, and socially and economically disadvantaged business owners under the Restaurant Revitalization Fund. SBA regulations define “socially disadvantaged individuals” as people “who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. The social disadvantage must stem from circumstances beyond their control.”

Last Thursday, the SBA announced that it had received 147,000 applications from women, veterans, and socially and economically disadvantaged business owners who requested a total of $29 billion in relief funds. That would exhaust all funds available under the program, and no other individuals who fall outside the favored racial and gender classifications would receive anything from the program.

Late on Tuesday, Judge O’Connor blocked implementation of the program as intended:

This is the latest example of GOP and conservative interest groups applying the same “forum shopping” tactics in waging “lawfare” against the Biden Administration as Democrats and liberal interest groups waged against the Trump Administration.  Conservatives have turned to the federal courts in Texas, well stocked with Judges appointed by President Bush 43 and President Trump, when seeking to block Biden Administration policies and programs. Judge O’Connor was appointed by President Bush in 2007.  In addition to having been a federal prosecutor, Judge O’Connor also worked on the staff of the Senate Judiciary Committee under Chairman Orrin Hatch.

Back in January, Texas sued the Administration over its announced policy that it was suspending removals of illegal aliens with Orders of Deportation for 100 days while it re-evaluated immigration policy.  A federal judge in the Southern District of Texas issued an injunction in favor of Texas in that case.

In March, 21 States Attorneys General sued the Biden Administration over its order halting construction on the Keystone XL Pipeline. That lawsuit was also brought in the US District Court for the Southern District of Texas.

When the Democrats and liberal interest groups engaged in similar forum shopping against Trump Administration policies, they went to the Northern District of California and the Pacific Northwest. Decisions from the district courts were appealed to the liberal Ninth Circuit Court of Appeals. That generally meant that the Trump Administration had to pin its hopes on the Supreme Court reversing bad outcomes in the Court below.

Presumably, the Biden Administration will not find a similar path to overcome legal opposition. The decisions coming out of the federal district courts in Texas are appealed to the extremely conservative Fifth Circuit Court of Appeals. Presumably, most of the lower court decisions coming from conservative district court judges will be sustained in the Fifth Circuit. That would leave the Biden Administration’s only recourse to then take matters to the Supreme Court, and its 6-3 conservative majority.

It was quite audacious for the Biden Administration to require the restaurant aid program to expressly and purposely prioritize the funding grants on the basis of race and gender. The decision by the court today involves only the issuance of a short-term “restraining order,” and the Court will now allow the parties to present more complete arguments and evidence in considering whether to extend the TRO into a preliminary injunction. We should know within a few days whether the Biden Administration is going to fight on, or if it will concede as a legal matter and remove the priority given to women and minority restaurant owners.

Greer Cafe was assisted in bringing the action by America First Legal foundation which was recently organized by former Senior Trump White House Advisor Stephen Miller and White House Chief of Staff Mark Meadows.