CIR Files Suit to Void Racial Preferences in Many Federal Programs 

The Center for Individual Rights (CIR), in partnership with the Wisconsin Institute for Law & Liberty (WILL), has filed an innovative suit in federal court to force the repeal of an unconstitutional racial preference regulation that has been incorporated into many federal contract, loan, investment, and grant programs.   

This lawsuit targets the Small Business Administration’s Section 8(a) Business Development Program regulation, which gives preferential treatment to all members of certain “socially disadvantaged” racial and ethnic groups without any requirement for individualized evidence or review.

The SBA’s Section 8(a) program operates on an unconstitutional premise: someone’s race or ethnicity is definitive proof of “social disadvantage.” People from certain favored races are automatically given preferential access in federal contracting and a number of other benefit programs. 

The lawsuit focuses on several individuals who have been directly harmed by these pernicious regulations. Matthew Schultheis is an AI business entrepreneur who applied for investment capital through a federal small business program. He has a promising small business, great substantive qualifications, and economic need. But Matthew was the “wrong” race to receive funding through the program.

Similarly, students in hundreds of Young America’s Foundation college chapters want to compete for a paid cybersecurity fellowship at the Department of Homeland Security. They are studying in the relevant fields and have strong grades. Despite being qualified, their race means they can’t receive the valuable tuition assistance, hands-on experience and the potential for jobs after graduation that the program provides.  

“In our previous cases, we challenged several specific Biden-era programs that discriminated based on race. We won. But now is the time for a new strategy that targets the nerve center of many of the remaining DEI programs: the preference for the so-called ‘socially disadvantaged.’” WILL Deputy Counsel Dan Lennington stated.

Not only is the 8(a) program’s race-based stereotyping unlawful, the racial categories used are arbitrary and unhelpful. For example, Americans with Pakistani heritage are presumed disadvantaged, but those with Afghan heritage are not. Additionally, there is no expiration date for these racial preferences. And the Section 8(a) program has no mechanism to remove any groups from the list. The racial categories have remained essentially unchanged for almost 40 years, even as the legal and social landscape has evolved. The result is a rigid system that distributes federal benefits based on ancestry, not actual disadvantage or need. 

Worse still, many other federal agencies have incorporated this outdated presumption into their own regulatory schemes, spreading this unconstitutional policy throughout the government. In a first-of-its kind lawsuit, CIR and WILL have challenged the original regulation that is the beating heart of these illegal applications, seeking to finally end racial discrimination throughout the federal bureaucracy.  

“The SBA’s unconstitutional racial presumption didn’t stay confined to one program,” said CIR Lead Attorney Mike Petrino. “It’s been copied, repackaged, and embedded in agency rules across the federal government. In challenging 8(a), we’re exposing the legal foundation of an uncountable number of unconstitutional programs build on the same flawed premise.”

This lawsuit is part of CIR’s broader effort to restore constitutional limits on the use of race in federal policymaking. By challenging the legal core of the SBA’s Section 8(a) program, CIR seeks to unwind a network of race-based regulations that have spread unchecked through the administrative state. Prior lawsuits by both CIR and WILL established important precedents invalidating individual federal contracting programs. 

To read the complaint and learn more about the case, visit our case page.