Small Business Administration used unconstitutional racial preferences despite warnings

Small Business Administration used unconstitutional racial preferences despite warnings
World's largest gavel, outside courthouse in Columbus, Ohio

Does the Biden administration even care about the Constitution? The Agriculture Department knew its racial preferences for black and non-white farmers were unconstitutional. But it provided race-based debt relief anyway, until judges ordered it to stop doing so, as the Daily Wire reported earlier.

The Small Business Administration similarly provided racial handouts to certain minority restaurant owners, which were unconstitutional, as a federal appeals court recently ruled. It probably knew that its racial preferences were unconstitutional, but we can’t be certain yet, because it has so far withheld relevant records sought under the Freedom of Information Act (FOIA), citing “deliberative process privilege” and attorney-client privilege.

The records were sought by the Bader Family Foundation and Liberty Unyielding in a May 2021 FOIA request about communications related to the constitutionality or unconstitutionality of the SBA’s racial preferences. Under federal law, the SBA had a duty to respond to the FOIA request within 20 working days, back in June. But instead, the SBA violated FOIA, and did not respond to the request at all until after it was sued for the records this summer. Indeed, it took until September 3, 2021, before the SBA produced any of the records sought. At that time, it finally produced 38 pages of documents, which can be found at this link. But it continued to withhold 195 documents in their entirety, as supposedly being “privileged.”

The SBA was warned that its racial preferences were likely unconstitutional, before they were struck down. One of the records the SBA produced was a May 2021 email to Isabella Casillas Guzman, Administrator of the Small Business Administration. That email says:

Trending: When words fail, say it with fists. When fists fails, play the race card

What is the SBA’s response to claims that the priority given to black, Hispanic, and female restaurant owners in the American Rescue Plan’s aid to restaurant owners violates the Constitution’s equal-protection guarantee?

This seems to violate the Supreme Court’s decisions in Richmond v. J.A. Croson Co. (1989) and Adarand Constructors, Inc. v. Pena (1995).

Lawyers and law professors claim this race-based priority for black, Hispanic, and female restaurant owners violates the Constitution. See, e.g., Jonathan Turley, “Biden’s COVID aid: Is it ‘preference’ or ‘prejudice,'” The Hill, May 22, 2021 (https://thehill.com/opinion/judiciary/554886-bidens-covid-aid-is-it-preference-or-prejudice); Mairead McArdle, “Biden’s Restaurant Relief Program Excludes White Male Owners: White males will not be considered for three weeks, when the program is expected to be depleted,” The Daily Wire, May 12, 2021 (https://www.dailywire.com/news/bidens-restaurant-reliefprogram-excludes-white-male-owners).

Specifically, they say there’s no evidence of recent, widespread, intentional discrimination against minorities and women by the government (or people acting in cahoots with the government), as the Constitution requires for a race-based priority of this sort. So the Small Business Administration and the Commerce Department are violating the Constitution by giving priority to certain restaurant owners based on their race, under the American Rescue Plan.

After this email was sent, a federal appeals court found this racial preference did indeed violate the Constitution, in Vitolo v. Guzman. That court ruling issued a preliminary injunction against the SBA, after a white restaurant owner appealed a trial court ruling that had declined to issue a temporary restraining order against it.

Although the SBA produced this email, and 37 other pages of records, it withheld 195 records in their entirety, as supposedly being exempt from disclosure under the Freedom of Information Act. It claimed the records it withheld were privileged under “deliberative process privilege,” “attorney-client privilege,” or as privileged attorney work product.

By withholding most records in their entirety, rather than merely redacting privileged portions of them, the SBA is violating the Freedom of Information Act. Under FOIA, an agency has a duty to “consider whether partial disclosure of information is possible whenever the agency determines that a full disclosure of a requested record is not possible; and take reasonable steps necessary to segregate and release nonexempt information.” (See 5 U.S.C. § 552(a)(8)(A)(ii)).

That duty to make partial disclosure is especially strong when an agency withholds records under the “deliberative process privilege,” because that “privilege applies only to the ‘opinion’ or ‘recommendatory’ portion” of a document, not the “factual information” in it, according to the D.C. Circuit Court of Appeals. So the agency generally needs “to segregate and release nonexempt information.”

Moreover, by withholding the records in their entirety, rather than just sensitive portions of them, the SBA has violated a provision of FOIA that states that an agency can “withhold information” that is privileged “only if the agency reasonably foresees that disclosure would” cause a “harm” covered by FOIA’s exemptions. (See 5 U.S.C. § 552(a)(8)(A)(i)).

The D.C. Circuit Court of Appeals has explained that just because information is privileged, does not mean its disclosure would necessarily cause harm. Accordingly, it ruled, if information is not that sensitive, it has to be produced, despite its privileged status. (See Reporters Committee for Freedom of the Press v. FBI (2021)).

The SBA has not even alleged that disclosing the 125 records it has withheld would cause any harm, so it cannot justify withholding them in their entirety. It is very suspicious that it has withheld most of the records covered by the FOIA request in their entirety, rather than merely redacting their privileged portions. When the Agriculture Department responded to a similar FOIA request about the constitutionality or unconstitutionality of its racial preferences, it produced 254 pages of documents in redacted form, while withholding only 19 pages in their entirety (although its redactions were excessive). SBA has ignored its duty under FOIA to make “partial disclosure of information” through redactions that “segregate and release nonexempt information.”

The SBA also hasn’t disclosed who sent or received these records. If anybody outside the federal executive branch received them, any privilege was likely waived as a result. That would mean those records have to be produced, even if SBA views their release as harmful.

Three of the 38 pages of records produced by SBA were produced in garbled form that omitted letters in many words, and included very tiny type, making them incomprehensible. One email appears to relate to Senate Majority Leader Charles Schumer (D-NY), an advocate of the racial and gender preferences.

The SBA’s COVID-relief program discriminated against white male restaurant owners, while relying on arbitrary notions of what people are white. As judges noted in Vitolo v. Guzman, it provided “preferences for Pakistanis but not Afghans; Japanese but not Iraqis; Hispanics but not Middle Easterners.” “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.”

Hans Bader

Hans Bader

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department. Hans writes for CNSNews.com and has appeared on C-SPAN’s “Washington Journal.” Contact him at hfb138@yahoo.com

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