Biden Is Prioritizing Billions Of COVID Funds By Race And Gender. Is That Constitutional?

Joe Biden’s COVID relief plan, the “American Rescue Plan,” is a sprawling program that allocates $1.9 Trillion for a broad variety of purposes. It is unusual not only in its size and scope, but because it allocates portions of that money on the basis of race, and to a lesser degree, gender.

For example, according to a recently filed federal lawsuit: “Among other things, [the American Rescue Plan] provides billions of dollars of debt relief to ‘socially disadvantaged’ farmers and ranchers. The phrase ‘socially disadvantaged’ includes explicit racial classifications: to be eligible for ARPA’s debt relief, farmers and ranchers must be Black or African American, American Indian or Alaskan native, Hispanic or Latino, or Asian American or Pacific Islander. Other farmers—white farmers, for example—are ineligible.”

Another example is the “Restaurant Revitalization Fund”. It only allows applications from certain groups such as women and the “socially disadvantaged” during its three week “priority period” for applying for funds.

The Biden Administration has not sought to draw attention to this aspect of the American Rescue Plan. That’s probably because it wants to avoid the sort of litigation that that has paralyzed parts of Oregon’s race-based COVID relief law. As the New York Times reported: “Oregon earmarked $62 million to explicitly benefit Black individuals and business owners. Now some of the money is in limbo after lawsuits alleging racial discrimination.” One of the lawsuits is by Mexican American café owners who argue that their application for funds was unconstitutionally rejected because they aren’t Black.

So is any of this constitutional? The answer is complicated. As noted, the federal funds for restaurants have a three week priority period where only certain groups of restaurant owners can apply. One such group is women. While laws that distinguish between people on the basis of race are subject to federal court’s toughest level of scrutiny, gender-based laws are subject to a mushy “intermediate” level of scrutiny. Under intermediate scrutiny, a law can only make gender distinctions if it “substantially furthers an important government interest.” It’s never been very clear what that actually means and the courts have interpreted this test in different ways over the years. Interestingly, Joe Biden is a strong supporter of the Equal Rights Amendment, which would make gender distinctions in the law just as disfavored as racial distinctions. So it would be ironic if his administration ends up defending the law by arguing for a lower level of judicial scrutiny of gender-based laws.

What about using race in allocating COVID relief funds? Courts apply “strict scrutiny” to racial distinctions in the law. This means that any use of race in allocating funds would be struck down by the courts unless it is narrowly tailored to further a compelling governmental purpose. That’s an extremely tough standard.

The Biden Administration is likely to argue that the law furthers racial equity. President Biden has often used the term “structural racism”, which means: “A system in which public policies, institutional practices, cultural representations, and other norms work in various, often reinforcing ways to perpetuate racial group inequity.” So his administration will probably argue that prioritizing certain funds based on race is a counterweight to structural racism.

That argument would probably fail in the courts though. The Supreme Court has repeatedly made clear that the government cannot write race-based laws to compensate for general societal discrimination. For example, the Court has written that: “We have never approved a classification that aids persons perceived as members of relatively victimized groups at the expense of other innocent individuals in the absence of judicial, legislative, or administrative findings of constitutional or statutory violations.”

The Biden Administration might have more success by arguing that it isn’t actually using race to allocate money, but is actually prioritizing payments to “socially disadvantaged” individuals regardless of their race. But that defense will be tricky as well. A U.S. Department of Agriculture webpage says: “The American Rescue Plan Act uses . . . [a] definition of socially disadvantaged farmers and ranchers, which includes those who are one or more of the following: Black, American Indian/Alaska Native, Hispanic, Asian, and Hawaiian/Pacific Islander.” So it will be tough to argue that the law isn’t making racial distinctions.

The argument that “socially disadvantaged” isn’t a racial category might have more luck regarding other parts of the law. For example the Restaurant Revitalization Fund defines socially disadvantaged individuals as: “those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.” 

So under this definition, a white person could conceivably be considered socially disadvantaged if he or she lived or worked in an environment that discriminated against white people. That seems a bit of a stretch though. At a minimum, the courts would likely demand that the Biden Administration demonstrate that a significant number of white applicants had actually qualified as socially disadvantaged for the purposes of these programs. As a result, there is a good chance that the racially targeted parts of Biden’s COVID relief plan could end being struck down by the courts or at least tied up in litigation for some time.