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Lawyers said a federal judge’s order barring the US DOT from using assumptions based on gender or race in its Disadvantaged Enterprise Program for certain contracts could effectively apply in at least 23 states and, potentially, across the country.
US District Judge Gregory Van Tatenhove clarified on October 31 that its previous decision in a lawsuit filed by two Indiana-based highway contractors, applies to “all states in which plaintiffs operate or offer DOT contracts affected by DBE goals,” not just Indiana and Kentucky.
Because the DOT can’t know where the two contractors that filed the original lawsuit will bid in the future, attorney Chris Slottee said the order now could weaken the program nationally.
“This could make DOT hesitant to use the DBE program in the future, since DOT will not know which projects plaintiffs will or will not bid on,” Slottee said. an attorney at Schwabe, Williamson & Wyatt in Anchorage, Alaska, via e-mail
A DOT spokesman said the agency plans to keep the program intact, at least for now. “As the case progresses, we will continue to defend the program,” the spokesman said via email. “In the meantime, we will comply with the court’s ruling, and otherwise the program will remain in place.”
Other potential challenges
The original lawsuit is still pending, and the order technically only applies to contracts where the two companies — Jeffersonville, Ind.-based Mid-America Milling Co. and Memphis, Ind.-based Bagshaw Trucking — will bid, but lawyers said that opens the door for other potential challengers to win against the program.
“The decision is also significant because other plaintiffs may seek to use this court’s September 23, 2024 order and this October 31, 2024 order to obtain similar injunctions across the U.S. against enforcement of the program federal DBE,” Keith Wiener, an attorney at Holland & Knight in Atlanta, said by email.
DOT’s DBE program targets that at least 10 percent of federal contract dollars be awarded to women- and minority-owned businesses, which it assumes are at a disadvantage because of the gender or race of their owners. DBEs have raised nearly $34 billion of federal transportation contracts over the past five years, according to public data cited by The Washington Post.
Van Tatenhove’s original Sept. 23 demand found that aspect of the program likely unconstitutional, but apparently limited where it applied. Van Tatenhove wrote at the time that “the scope of the preliminary injunction will apply to plaintiffs in the states where they operate, Kentucky and Indiana.”
But in his subsequent clarification, Van Tatenhove said the defendants, which include US Transportation Secretary Pete Buttigieg, were “clinging to the sentence of the Court” to refuse to apply the requirement to contracts from other states where the plaintiffs bid.
His clarification, which was requested by the plaintiffs in the suit, who claimed the program amounted to reverse discrimination against them, left little doubt.
Van Tatenhove wrote that DOT, Buttigieg and other officials were “REGISTERED since requiring the use of race- and gender-based rebuttable presumptions for U.S. Department of Transportation contracts affected by the DBE targets on which the plaintiffs are bidding, to be effective in any state in which the plaintiffs operate or bid for those contracts
Slottee said the language could effectively prevent DOT from implementing 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 United States for which plaintiffs submit a bid,” Slottee wrote.
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 prohibited from using presumptions based on gender and breed for DBE contracts. 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
Alternatively, DOT could choose to remove its presumption of disadvantaged status based on gender or race, as the The Small Business Administration recently did with its own 8(a) program. In this case, SBA said applicants must submit a narrative that illustrates why they should be considered disadvantaged.
