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More Katrina Waste

Yesterday, New Orleans Mayor Ray Nagin issued an executive order commanding businesses seeking federally-funded disaster relief administered by the City of New Orleans to award at least 50 percent of their business to local businesses and at least 35 percent to minority and women-owned businesses. Assistance will now be denied those businesses that contract based on merit, rather than discriminating based on race or geographic origin. Nagin's minority set-aside rule violates court rulings from the New Orleans-based Fifth Circuit Court of Appeals, which has ruled that a government entity cannot impose racial preferences except to remedy its own past discrimination, or the past discrimination of the entities it seeks to force to engage in racial preferences. Under Fifth Circuit decisions such as the Caddo Parrish School Board case and Messer v. Meno (1997), minority preferences cannot be used to promote “diversity,” except in college admissions. Doing so violates the Fourteenth Amendment of the federal Constitution. It also may violate the Louisiana State Constitution. In 1996, the Louisiana Supreme Court ruled in the Associated General Contractors case that race-based affirmative action is flatly forbidden by the State Constitution. Nagin's local-business preference probably violates the Privileges and Immunities Clause, which the U.S. Supreme Court, in the Camden case, held bars cities from discriminating against out-of-state individuals, even with respect to a city's own contracts. It may also violate the Dormant Commerce Clause, which prevents a city from discriminating against out-of-state businesses except with regard to a city's own contracts. Nagin's order implicates the Dormant Commerce Clause because it reaches beyond contractors with the City of New Orleans to businesses that merely seek federally-funded disaster assistance that the City happens to administer.