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.