Jackson Jambalaya

The Biden Administration's plan to favor minorities and women over white males when distributing covid relief funds to restaurants ran into an emergency injunction issued by the Sixth Circuit Court of Appeals last week.   

The Small Business Administration is doling out nearly $10 billion in aid for restaurants, nightclubs, and other service industry businesses.  However, the SBA placed minorities, women, and the economically disadvantaged at the front of the line.  White guys had to go to the back and hope there was some money left for them as the SBA will not consider their applications until after 21 days.  Applications are approved on a first-come, first-served basis.  

Antonio Vitolo and his wife equally own a Tennessee restaurant.  Mr. Vitolo is White while Mrs. Vitolo is Hispanic (although it is not known if she is a true Hispanic under Nikole Hannah-Jones's definition.).  The restaurant struggled during the pandemic as most did. 

The Vitolos applied for relief but since The Boss does not own 51% of the restaurant, their application went to the back of the line.  The couple sued to overturn the guidelines and block the distribution of the funds.  The Vitolos sued and lost at the trial court level.  They appealed to the Sixth Circuit for emergency relief.

The Court said the racial preferences violated the Equal Protection Clause of the Constitution.  The opinion states: 

 Most fundamentally, the program’s race and sex preferences did not end with the priority phase.   That just marks when the Small Business Administration starts processing applications from non-priority restaurants.  The agency says processing takes approximately 14 days.  So all of the “priority” applications that were received in the 21-day window are still being processed first.  And no application is paid out before going through the 14-day processing window. So  with  these  preferences  in  place,  the  fund  may  be  depleted  before  the plaintiffs’ application has been processed.   There is an obvious solution to this of course:   The agency can simply fund grants in the order they were received—without regard to priority status, and without regard to the processing head start that many applications received on the basis of race and sex.

Turning  to  this  case,  plaintiffs  continue  to  suffer  a  real  and  concrete  injury  by  having their  application  considered  behind  the  priority  applications  because  of  race  and  sex.   Vitolo submitted his application on May 3.   Restaurants that submitted “priority” applications on May 24  will  likely  receive  their  grants  before  the  agency  has  time  to  finish  processing  Vitolo’s application.  Add to this the fact that over half the funds have been approved to be distributed as of May 25, 2021, to priority applicants.   Miller Decl. ¶ 22.   Since it normally takes 14 days to process an application, this means that the agency should be almost through priority applications received  between  May  3  and  May  11.   But  that  leaves  all  the  priority  applications  received between  May  12  and  May  24,  which  have  gotten  a  processing  head  start  relative  to  Vitolo’s application.  There is a real risk that the funds
will run out, unless the agency processes Vitolo’s application before the May 12 to May 24 batch.  For these reasons, the government has failed to show that the case is moot.

 The Court slammed the government's nitpicking: 

Indeed,  the  schedule  of  racial  preferences detailed in the government’s regulation—preferences for Pakistanis  but not Afghans; Japanese but not Iraqis; Hispanics but not Middle Easterners—is not supported by any record evidence at all....

 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.   It is indeed “a sordid business” to divide “us up by race.”

The Vitolos may still find their application is rejected.  The Court only removed the preferences for relief and made no determination whether the restaurant should actually obtain any government aid.

The aid is part of a $28.6 billion restaurant relief package.  The SBA will provide up to $5 million per location and $10 million for the entire business.  The loans are forgiven if spent by March 2023.