Commerce GOP Senators: Admin Should Withdraw Racist and Unconstitutional CHIPS Funding Guidance
February 16, 2024
Commerce Department Plan Violates 5th Amendment, Civil Rights Laws by Considering Skin Color of an Applicant’s Suppliers
WASHINGTON, D.C. – U.S. Senate Commerce Committee Ranking Member Ted Cruz (R-Texas), U.S. Senator Cynthia Lummis (R-Wyo.), and U.S. Senator JD Vance (R-Ohio) are calling on the U.S. Department of Commerce (Commerce) to reverse its unlawful and discriminatory guidance surrounding the distribution of CHIPS Act funding.
In August 2023, the Commerce Department released new guidance stating it would consider the race of an applicant’s suppliers when awarding funding—a clear violation of the Fifth Amendment to the U.S. Constitution, Title VI, and the Civil Rights Act of 1866. The guidance requires applicants to “document . . . how the applicant intends to address the inclusion of . . . minority owned business . . . [t]hrough a supplier diversity plan” with “measurable targets,” including how much money it plans to spend on “minority-owned” suppliers by 2030. The guidance also explains the Department will consider an applicant’s diversity plan as part of the merit review process, and assess the plan based on the applicant’s strategy for engaging with minority-owned businesses and “commitment to tracking and disclosing disaggregated data on supplier diversity and contractor/subcontractor diversity.”
In a letter to Commerce Secretary Gina Raimando, the Senators outlined how reliance on the new guidance violates the Fifth Amendment, Title VI, and the Civil Rights Act of 1866.
“The federal government is forbidden from engaging in race-based discrimination under the equal protection component of the Fifth Amendment’s Due Process Clause. And as the Supreme Court has explained, it is ‘axiomatic that a [government] may not induce, encourage or promote private persons to accomplish what it is constitutionally forbidden to accomplish.’”
“[A] federal court recently held that a similar federal program was unconstitutional. In Ultima Servs. Corp. v. U.S. Department of Agriculture, a small business owned by a white woman sued the Department of Agriculture (USDA) and the Small Business Administration (SBA), claiming that agencies’ reliance on race to determine which businesses qualified for the SBA’s 8(a) Business Development Program violated the Fifth Amendment’s Due Process Clause. The court agreed that the 8(a) Program could not survive strict scrutiny. In reaching this conclusion, the court rejected the government’s evidence regarding disparities minority businesses face nationally as insufficiently specific and concluded that the 8(a) Program’s permanence, over- and under-inclusiveness, and lack of specific objectives demonstrated that it was not narrowly tailored. As a result, the SBA had to revamp the 8(a) program. It does not take psychic abilities to predict that the Department will find itself in a very similar situation as the USDA and SBA if it continues down this path.”
“The Department’s Guidance intentionally treats certain applicants worse than others on the ground of the race of their suppliers. Title VI forbids such discrimination.”
“In addition to instructing the federal government to violate the law, the Guidance also encourages private businesses to discriminate on the basis of race in violation of federal law, specifically Section 1981. Section 1981 makes it illegal for private companies to discriminate on the basis of race when making and enforcing contracts.”
The Senators concluded by requesting Commerce confirm in writing that its guidance is no longer in place or outline in detail why it believes the guidance does not violate the law.
Read the full text of the letter HERE.
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