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A federal judge’s injunction prohibiting the U.S. DOT from using gender- or race-based assumptions in its Disadvantaged Business Program for certain contracts could effectively apply in at least 23 states, and potentially nationwide, attorneys said.
U.S. District Judge Gregory Van Tatenhove clarified Oct. 31 that his previous ruling in a lawsuit filed by two Indiana-based highway contractors applied to “all states in which the Plaintiffs operate or bid on DOT contracts impacted by DBE goals,” not just Indiana and Kentucky.
Because DOT can’t know where the two contractors who filed the original lawsuit will bid in the future, attorney Chris Slottee said the order could now effectively weaken the program nationally.
“This could cause the DOT to hesitate to use the DBE program going forward, given that the DOT will not know what projects the plaintiffs are, or are not, going to bid upon,” said Slottee, an attorney at Schwabe, Williamson & Wyatt in Anchorage, Alaska, via email.
A DOT spokesperson said the agency plans to keep the program intact, at least for now. “As the case moves forward, we will continue to defend the program,” the spokesperson said via email. “In the meantime, we will comply with the court’s ruling, and the program otherwise remains in effect.”
Other potential challenges
The original suit is still ongoing and the injunction technically only applies to contracts that the two firms — Jeffersonville, Indiana-based Mid-America Milling Co. and Memphis, Indiana-based Bagshaw Trucking — bid on, but attorneys said it opens the door for other potential challengers to score wins against the program.
“The decision is significant also because other Plaintiffs may attempt to use this court’s order on September 23, 2024 and this October 31, 2024 order to obtain similar injunctions throughout the US against the enforcement of the federal DBE Program,” said Keith Wiener, an attorney at Holland & Knight in Atlanta, via email.
DOT’s DBE program sets goals that at least 10% of dollars in federal contracts be awarded to women- and minority-owned firms, which it presumes are disadvantaged due to their owners’ gender or race. DBEs have netted nearly $34 billion from federal transportation contracts in the last five years, according to public data cited by The Washington Post.
Van Tatenhove’s original Sept. 23 injunction found that aspect of the program was likely unconstitutional, but seemingly limited where it applied. Van Tatenhove wrote then that “the scope of the preliminary injunction shall apply to the Plaintiffs in the states within which they operate, Kentucky and Indiana.”
But in his subsequent clarification, Van Tatenhove said the defendants — which include U.S. Transportation Secretary Pete Buttigieg — were “Latching on to the Court’s phrasing” to refuse to apply the injunction to contracts in other states where the plaintiffs bid.
His clarification, which was requested by the plaintiffs in the case, who asserted the program amounted to reverse discrimination against them, left little doubt.
Van Tatenhove wrote that DOT, Buttigieg and other officials were “ENJOINED from mandating the use of race- and gender-based rebuttable presumptions for United States Department of Transportation contracts impacted by DBE goals upon which the Plaintiffs bid, to be effective in any state in which Plaintiffs operate or bid on such contracts.”
Slottee said that language could effectively stop DOT from applying the DBE program anywhere in the U.S. “As such, the district court’s ruling could affect DOT projects outside of Kentucky and Indiana and will apply to any project in the United States for which the plaintiffs submit a bid,” wrote Slottee.
At least 23 states
In their request for Van Tatenhove to clarify his order, the original plaintiffs listed 23 states, including Indiana and Kentucky, where they currently do business, areas that would almost certainly now be barred from using gender- and race-based presumptions for DBE contracts. The additional states are:
- Tennessee
- Arkansas
- Ohio
- Mississippi
- Delaware
- Alabama
- Louisiana
- Virginia
- Oklahoma
- South Carolina
- West Virginia
- Missouri
- Illinois
- North Carolina
- Georgia
- Michigan
- Iowa
- Kansas
- Minnesota
- Texas
- Florida
On the other hand, DOT could opt to remove its assumption of disadvantaged status based on gender or race, as the Small Business Administration recently did with its own 8(a) program. In that instance, SBA said applicants needed to submit a narrative illustrating why they should be considered disadvantaged instead.