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Federal Appellate Court Rules That Biden Administration Can’t Deny COVID Relief Funds To White Restaurant Owners


The COVID relief bill passed by Congress and signed by President Biden allocates billions of dollars based on race. In mid-May a federal court in Texas ruled that the race-based parts of the law governing relief to restaurant owners is unconstitutional. Last week a higher federal court, the Sixth Circuit Federal Court of Appeals, ruled the same way.

The law establishes a three week “priority period” in which only applicants from certain racial and ethnic backgrounds can request relief. The appellate court pointed out that there is no guarantee that any funds will remain after the priority period expires.

As discussed in a recent post, the Biden Administration is heavily committed to the idea of “equity” rather than equality. This means, in the words of the oft-quoted  critical race theorist, Ibram X. Kendi: “The only remedy to racist discrimination is antiracist discrimination. The only remedy to past discrimination is present discrimination. The only remedy to present discrimination is future discrimination.”

Given the history of Jim Crow, as well as current racial inequalities, it’s understandable that Biden wants to go the extra mile to make sure that minority-owned restaurants get their fair share of COVID relief. But his embrace of using “anti-racist discrimination” to combat racist discrimination was always likely to run into trouble in the courts. Biden may especially come regret his choices here because the arbitrariness of the racial exclusions in this law will sorely tempt the Supreme Court to use this case to strictly limit the use of race by the government.

As the appellate court points out, the law is full of arbitrary distinctions. For example, a restaurant owner is only considered “Asian Pacific” if they have “origins from” a specific set of countries. But the list of countries defies logic. For example, it excludes Afghanistan, which sits in central Asia and is a member of the South Asian Association for Regional Cooperation alongside Pakistan, India and Bangladesh.

Therefore, the court explained: “The stark realities of the Small Business Administration’s racial gerrymandering are inescapable. Imagine two childhood friends—one Indian, one Afghan. Both own restaurants, and both have suffered devastating losses during the pandemic. If both apply to the Restaurant Revitalization Fund, the Indian applicant will presumptively receive priority consideration over his Afghan friend. Why? Because of his ethnic heritage.”

The law’s definition of “minority-owned” is also quite arbitrary—it must be at least 51% owned by a minority. One of the restaurants that challenged the program is owned 50/50 by a husband and wife, one of who is Latina. What purpose does it serve to force the husband to transfer an additional 1% ownership to his wife in order to qualify for relief?

Also, the law pays no attention to who actually works at the restaurant or what community it serves. An upscale restaurant in Portland (the whitest major city in America) with mostly white employees serving mostly white customers qualifies for aid if it is majority-owned by, say, a Hong Kong Investor. But a Persian-owned restaurant in a racially mixed neighborhood in Los Angeles with a mostly minority staff would not qualify.

Defenders of the program might say that such imperfections are necessary in order to reach restaurants that haven’t previously received relief due to structural racism. But the appellate court points out that the same result could have easily been achieved without resort to racial exclusions.

Said the court: “Here, the government could have used any number of alternative, nondiscriminatory policies. Yet it failed to do so. For example, the government contends that minority-owned businesses disproportionately struggled to obtain capital and credit during the pandemic. But obvious race-neutral alternative exists: The government could grant priority consideration to all business owners who were unable to obtain needed capital or credit during the pandemic.”

It may be true that systemic racism means that some minority-owned restaurants didn’t get needed relief. But surely there are restaurants owned by people with ancestries from Europe, the Middle East, and North Africa who also didn’t get needed relief. Their minority employees won’t be thanking the Biden administration if they lose their jobs.

As the court says, it’s better to prioritize those restaurants that need help the most and haven’t yet received relief than to assume that some races and ethnicities are automatically more deserving of aid than others. At the minimum, that is what the Constitution requires.



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