Last month, a federal judge in Kentucky issued a decision granting a preliminary injunction to partially block the United States Department of Transportation’s Disadvantaged Business Enterprise (“DBE”) program. A copy of the decision can be found here. The injunction is limited only to the two plaintiffs (Mid-America Milling and Bagshaw Trucking) and to the two states where they operate (Kentucky and Indiana). However, it may pave the way for future challenges to the program.
The DBE program sets contracting goals of 10% of USDOT contracting dollars to go to firms with DBE certification showing that they are small businesses owned by socially and economically disadvantaged individuals. Under the program, women and minorities that have a rebuttable presumption of social and economic disadvantage, while others can make an individual showing of disadvantage.
The plaintiffs in this legal challenge are two companies owned by non-Hispanic white males who claim to have alleged “reverse discrimination” in contracting where federal transportation funding is at play. Notably, it does not appear that either plaintiff attempted to show that they were disadvantaged and thus should qualify for the program.
The Court found that the program, when it comes to these two plaintiffs, was unconstitutional and that its racial and gender classifications of owners violated the principles of equal protection. The Court also recognized that the government would appeal the decision to the Sixth Circuit Court of Appeals, fully acknowledging that this dispute is not over.
DBEs should note that this decision does not have an immediate affect on any other DBE contracting opportunities outside of those involving these two companies in Kentucky and Indiana. While further challenges to the program are likely, the DBE program remains intact, for now.
