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1 1 (March 25, 2024)

handle is hein.crs/goveosv0001 and id is 1 raw text is: Congressional ____ ~ Research Service District Court Ruling on MBDA Business Development Program March 25, 2024 In a March 2024 decision, Nuziard et al. v Minority Business Development Agency (MBDA) et al., the U.S. District Court for the Northern District of Texas found the MBDA's presumption of social disadvantage for certain program applicants to be unconstitutional and ordered the agency to discontinue using race or ethnicity as criteria for receiving MBDA Business Center services nationwide. MBDA's Business Center programs offer technical assistance to minority business enterprises (MBEs) that have socially or economically disadvantaged business owners. MBDA does not directly operate the Business Centers; the agency partners with third-party Business Center operators that provide management and technical assistance to help MBEs access private capital for startup and expansion activities. According to the MBDA's 2023 Year In Review, there were 131 Business Centers in FY2023, including Specialty Centers and other similar projects. See CRS Report R46816 for additional information. The district court ruled that aspects of the MBDA's authorizing statute do not pass the strict scrutiny test, which applies when a statute or other government action provides burdens or benefits based on race, ethnicity, or national origin (see CRS In Focus IF12391 for additional information about the strict scrutiny test). Among other findings, the district court's order noted that there was insufficient evidence of government involvement in creating the disparities in credit access or discriminatory practices in private lending markets; thus, the court ruled that the MBDA failed the strict scrutiny test. The district court also ruled that allowing business owners of certain racial or ethnic groups to receive services based on the presumption of social or economic disadvantage was not narrowly tailored and so, all in all, the presumption violated constitutional equal protection principles. Key Terms Used in MBDA's Programs According to the agency's authorizing statute (15 U.S.C. §9501 et seq.), MBEs are businesses that are at least 51% owned by one or more socially or economically disadvantaged individuals. The term socially or economically disadvantaged individual means Congressional Research Service https://crsreports.congress.gov IN12337 CRS INSIGHT Prepared for Members and Committees of Congress

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