SBA’s ‘Socially Disadvantaged’ Rule Hit With Constitutional Suit

A Small Business Administration regulation presuming individuals are socially disadvantaged based purely on their race is unconstitutional, a conservative student group and Louisiana-based technology startup alleged Monday.

The government’s “pervasive use of race as a proxy for determining who is ‘socially disadvantaged’"—which is used in programs administered by agencies across the federal government—violates the US Constitution’s equal protection and due process clauses, a complaint filed in the US District Court for the Eastern District of Louisiana says.

The SBA and US Department of Justice didn’t immediately respond to requests for comment.

The SBA’s 8(a) program helps small businesses owned by ...