Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-15-05176/USCOURTS-caDC-15-05176-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 10, 2016 Decided September 9, 2016 

No. 15-5176 

ROTHE DEVELOPMENT, INC., 

APPELLANT

v. 

UNITED STATES DEPARTMENT OF DEFENSE AND UNITED 

STATES SMALL BUSINESS ADMINISTRATION, 

APPELLEES

Appeal from the United States District Court 

for the District of Columbia 

(No. 1:12-cv-00744) 

David F. Barton argued the cause and filed the briefs for 

appellant. 

Meriem L. Hubbard, Ralph W. Kasarda, and Joshua P. 

Thompson were on the brief for amici curiae Pacific Legal 

Foundation and Center for Equal Opportunity in support of 

appellant. 

Steven J. Lechner was on the brief for amicus curiae 

Mountain States Legal Foundation in support of appellant. 

Michael E. Rosman was on the brief for amicus curiae 

Center for Individual Rights in support of appellant. 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 1 of 55
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Teresa Kwong, Attorney, U.S. Department of Justice, 

argued the cause for appellees. With her on the brief was 

Mark L. Gross, Attorney. R. Craig Lawrence, Assistant U.S. 

Attorney, entered an appearance. 

Sherrilyn Ifill, Janai Nelson, Christina Swarns, and 

Daniel W. Wolff were on the brief for amici curiae NAACP 

Legal Defense and Educational Fund, Inc., Asian Americans 

Advancing Justice, AAJC, and the Leadership Conference of 

Civil and Human Rights in support of appellees. 

Christine V. Williams was on the brief for amici curiae 

Native American Contractors Association, et al. in support of 

appellees. 

 Before: HENDERSON, GRIFFITH and PILLARD, Circuit 

Judges. 

 Opinion for the Court filed by Circuit Judge PILLARD. 

 Opinion concurring in part and dissenting in part filed by 

Circuit Judge HENDERSON. 

PILLARD, Circuit Judge: Plaintiff-Appellant Rothe 

Development, Inc. (Rothe) alleges that the statutory basis of 

the Small Business Administration’s 8(a) business 

development program, Amendments to the Small Business 

Act, Pub. L. No. 95-507, ch. 1, sec. 202(a), 92 Stat. 1757, 

1761 (1978) (codified at 15 U.S.C. § 637), violates its right to 

equal protection under the Due Process Clause of the Fifth 

Amendment. Congress created the 8(a) program to extend 

government contracting opportunities to small business 

owners whose access to such opportunities was impaired by 

those individuals’ experience of racial or ethnic prejudice or 

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cultural bias. Rothe contends that the statute contains a racial 

classification that presumes that certain racial minorities are 

eligible for the program. But, in fact, Congress considered 

and rejected statutory language that included a racial 

presumption. Congress chose instead to hinge participation in 

the program on the facially race-neutral criterion of social 

disadvantage, which it defined as having suffered racial, 

ethnic, or cultural bias.

The challenged statute authorizes the Small Business 

Administration (SBA) to enter into contracts with other 

federal agencies, which the SBA then subcontracts to eligible 

small businesses that compete for the subcontracts in a 

sheltered market. 15 U.S.C. § 637(a)(1)(A)-(D). Businesses 

owned by “socially and economically disadvantaged” 

individuals are eligible to participate in the 8(a) program. Id. 

§ 637(a)(1)(B).1

 The statute defines socially disadvantaged 

individuals as persons “who have been subjected to racial or 

ethnic prejudice or cultural bias because of their identity as a 

member of a group without regard to their individual 

qualities.” Id. § 637(a)(5). 

Rothe is a small business that bids on Defense 

Department contracts, including the types of subcontracts that 

the SBA awards to economically and socially disadvantaged 

businesses through the 8(a) program. Rothe does not purport 

to be owned by an individual who has experienced racial or 

ethnic prejudice or cultural bias, and alleges that it “cannot 

participate in and has no desire to participate in the section 

8(a) program.” 1 App. 74 (Compl. ¶ 33). It objects to the 

program because it believes that the statute contains an 

 1

 Businesses owned by economically disadvantaged Indian 

tribes or Native Hawaiian organizations also qualify for the 8(a) 

program, see 15 U.S.C. § 637(a)(4)(A), but Rothe does not 

challenge that aspect of the statute. 

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unconstitutional racial classification that prevents Rothe from 

competing for Department of Defense contracts on an equal 

footing with minority-owned businesses. 

We disagree, because the provisions of the Small 

Business Act that Rothe challenges do not on their face 

classify individuals by race.2

 Section 8(a) uses facially raceneutral terms of eligibility to identify individual victims of 

discrimination, prejudice, or bias, without presuming that 

members of certain racial, ethnic, or cultural groups qualify as 

such. That makes it different from other statutes that either 

expressly limit participation in contracting programs to racial 

or ethnic minorities or specifically direct third parties to 

presume that members of certain racial or ethnic groups, or 

minorities generally, are eligible. Congress intentionally took 

a different tack with section 8(a), opting for inclusive terms of 

eligibility that focus on an individual’s experience of bias and 

aim to promote equal opportunity for entrepreneurs of all 

racial backgrounds. 

In contrast to the statute, the SBA’s regulation 

implementing the 8(a) program does contain a racial 

classification in the form of a presumption that an individual 

who is a member of one of five designated racial groups (and 

within them, 37 subgroups) is socially disadvantaged. See 13 

C.F.R. § 124.103(b). This case does not permit us to decide 

whether the race-based regulatory presumption is 

constitutionally sound, for Rothe has elected to challenge 

 2

 We refer to those statutory provisions collectively as “section 

8(a),” after the section of the public law that originally authorized 

the SBA’s contracting program, see Small Business Act of 1958, 

Pub. L. No. 85-536, § 8(a)(1)-(2), 72 Stat. 384, 389-91, but 

otherwise cite the codified versions of the relevant provisions. We 

refer to the contracting program as a whole, including the SBA’s 

regulations, as the “8(a) program.” 

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only the statute. Rothe alleged in its complaint that the 

“racial classification of section 8(a) of the Small Business 

Act, defined herein, is facially unconstitutional.” Compare 1 

App. 68 (Compl. ¶ 1) and id. at 76-77 (claims for relief), with 

W. States Paving Co. v. Wash. State Dep’t of Transp., 407 

F.3d 983, 990-91 (9th Cir. 2005) (plaintiff challenged both a 

statute’s race-neutral definition of social disadvantage and the 

agency’s racial presumption). Rothe’s definition of the racial 

classification it attacks does not include the SBA’s regulation. 

See infra 7; 1 App. 71-72 (Compl.); Appellant Br. 2-3. 

Rothe’s counsel’s statements during oral argument 

confirm the limited scope of Rothe’s challenge. When we 

asked counsel whether Rothe was challenging a racial 

classification that appeared “[i]n the statute or in the 

regulations,” he specified that Rothe was challenging the 

presumption “[i]n the statute.” Oral Arg. Tr. 4. We followed 

up: “[I]s the constitutional flaw in the statute alone, or is it in 

the statute and the regulations together?” Counsel for Rothe 

reiterated: “It’s in the statute alone . . . .” Id. at 5. It is thus 

clear that the regulations are beyond the scope of Rothe’s 

challenge. If there were any doubt, we would be obliged to 

read the complaint narrowly to reach the same conclusion. 

See Am. Fed’n of Gov’t Emps., AFL-CIO v. United States, 

330 F.3d 513, 517-19 (D.C. Cir. 2003) (construing plaintiffs’ 

suit in a manner that avoided raising an equal protection 

problem). 

Because the statute lacks a racial classification, and 

because Rothe has not alleged that the statute is otherwise 

subject to strict scrutiny, we apply rational-basis review, 

which the statute readily survives. Rothe’s evidentiary and 

nondelegation challenges to the decision below also fail. We 

therefore affirm the judgment of the district court granting 

summary judgment to the SBA and Department of Defense, 

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see Rothe Dev., Inc. v. Dep’t of Def., 107 F. Supp. 3d 183, 

212-13 (D.D.C. 2015), albeit on different grounds. 

I. 

The central question on appeal is whether section 8(a) of 

the Small Business Act warrants strict judicial scrutiny. The 

parties and the district court seem to think it does. See

Appellant Br. 10; Appellee Br. 16; Rothe, 107 F. Supp. 3d at 

189, 207; but see Oral Arg. Tr. 23 (Judge Griffith: “In your 

view does the statute create racial classifications, or is it the 

regulations?” Counsel for the government: “I believe it’s the 

regulations . . . .”). That fact does not relieve us of our duty 

to assess independently the legal issue before us. See United 

States v. Bigley, 786 F.3d 11, 17 (D.C. Cir. 2015) (Brown, J., 

concurring in the judgment) (“But we are required to ‘conduct 

an independent review’ of a legal issue, despite the 

government’s concession on appeal.” (quoting United States 

v. Russell, 600 F.3d 631, 636 (D.C. Cir. 2010)); cf. The 

Anaconda v. Am. Sugar Refining Co., 322 U.S. 42, 46 (1944) 

(A party “cannot stipulate away” what “the legislation 

declares”). 

There are at least three ways a plaintiff can plead an 

equal protection violation. A plaintiff may allege that the 

government has expressly classified individuals based on 

their race, see Parents Involved in Cmty. Sch. v. Seattle Sch. 

Dist. No. 1, 551 U.S. 701, 712, 716, 720 (2007); that the 

government has applied facially neutral laws or policies in an 

intentionally discriminatory manner, see Yick Wo v. Hopkins, 

118 U.S. 356, 373-74 (1886); or that facially neutral laws or 

policies “result in racially disproportionate impact and are 

motivated by a racially discriminatory purpose,” Adarand 

Constructors, Inc. v. Peña, 515 U.S. 200, 213 (1995) (citing 

Arlington Heights v. Metro. Hous. Dev. Corp., 429 U.S. 252 

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(1977), and Washington v. Davis, 426 U.S. 229 (1976)). 

Rothe advances only the first theory—that, on its face, section 

8(a) of the Small Business Act contains a racial classification. 

See 1 App. 68 (Compl. ¶ 1) (seeking “to obtain a declaration 

that the racial classification of section 8(a) of the Small 

Business Act, defined herein, is facially unconstitutional”). 

“[A]ll racial classifications imposed by government ‘must be 

analyzed by a reviewing court under strict scrutiny.’” Grutter 

v. Bollinger, 539 U.S. 306, 326 (2003) (quoting Adarand, 515 

U.S. at 227); see Fisher v. Univ. of Tex. at Austin, 133 S. Ct. 

2411, 2419 (2013) (“[U]nder Grutter, strict scrutiny must be 

applied to any admissions program using racial categories or 

classifications.”). 

According to Rothe, three provisions instantiate the 

statute’s racial classification: (1) the statutory definition of 

socially disadvantaged individuals; (2) a government-wide 

goal of letting 5% of federal contracts to small businesses 

owned by socially disadvantaged individuals; and (3) the 

findings section of the statute, which Rothe contends includes 

a presumption that members of the specified racial groups are 

socially disadvantaged. In our view, none of the three 

components—separately or together—imposes an express 

racial classification subject to strict scrutiny. 

A. 

Rothe first alleges that 15 U.S.C. § 637(a)(5)’s 

“definition of the term ‘socially disadvantaged’ contains a 

racial classification.” 1 App. 71 (Compl. ¶ 21). We disagree. 

The statute defines socially disadvantaged individuals as 

“those who have been subjected to racial or ethnic prejudice 

or cultural bias because of their identity as a member of a 

group without regard to their individual qualities.” 15 U.S.C. 

§ 637(a)(5). That definition does not “distribute[] burdens or 

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benefits on the basis of individual racial classifications.” 

Parents Involved, 551 U.S. at 720. “[T]he term ‘socially . . . 

disadvantaged’ is race-[]neutral on its face . . . .” W. States 

Paving Co., 407 F.3d at 988 (O’Scannlain, J.). It speaks of 

individual victims of discrimination. On its face, section 

637(a)(5) envisions an individual-based approach that focuses 

on experience rather than on a group characteristic. Many 

individuals—of all races—have experienced discrimination 

on account of their race or ethnicity, and victims of 

discrimination do not comprise a racial or ethnic group; a 

person of any racial or ethnic background may suffer such 

discrimination. And the statute recognizes that not all 

members of a minority group have necessarily been subjected 

to racial or ethnic prejudice or cultural bias. 

The focus on individuals who have experienced 

discrimination distinguishes section 637(a)(5) from the racial 

classification the Supreme Court considered in Regents of the 

University of California v. Bakke, 438 U.S. 265 (1978). There, 

the university’s medical school reserved 16 of 100 spaces in 

its class for “disadvantaged” students. Id. at 272, 279 

(opinion of Powell, J.). But under the Bakke program, an 

explicit factor in determining disadvantage was an applicant’s 

race—not his or her individual experience of racial or ethnic 

discrimination. Id. at 274-75 & n.4. Thus, Justice Powell

concluded, the program “was a minority enrollment program 

with a secondary disadvantage element” and therefore 

qualified as a racial classification. Id. By contrast, section 

637(a)(5) does not provide for preferential treatment “based on 

[an applicant’s] race—a group classification long recognized 

as ‘in most circumstances irrelevant and therefore 

prohibited,’” Adarand, 515 U.S. at 227 (quoting Hirabayashi 

v. United States, 320 U.S. 81, 100 (1943)), but rather on an

individual applicant’s experience of discrimination. In other 

words, this is not a provision in which “the race, not the 

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person, dictates the category.” Palmore v. Sidoti, 466 U.S. 

429, 432 (1984) (describing racial classifications). 

Unlike the program in Bakke, in which disadvantaged 

nonminority applicants could not participate, 438 U.S. at 281 

n.14, section 637(a)(5)’s plain terms permit individuals of any 

race to be considered “socially disadvantaged.” Contrary to 

our dissenting colleague’s contention, Dissent at 3, 6-7, 10, 

14-17, we do not believe such inclusiveness alone renders the 

statute race-neutral; it is necessary but not sufficient. Our key 

point is that the statute is easily read not to require any groupbased racial or ethnic classification. The statute defines 

socially disadvantaged individuals as “those [individuals] who 

have been subjected to racial or ethnic prejudice or cultural 

bias,” not, as the dissent suggests, those individuals who are 

members of groups that have been subjected to prejudice or 

bias. The statute references groups, but it does so not as “a 

floor for participation,” Dissent at 6, but to identify an 

important kind of social disadvantage Congress had in mind: 

individuals’ experience of having suffered “racial or ethnic 

prejudice or cultural bias because of their identity as a member 

of a group without regard to their individual qualities.” 15 

U.S.C. § 637(a)(5); see id. § 631(f)(1)(B), (C). 

Of course, the SBA’s implementation of section 

637(a)(5)’s definition may well be based on a racial 

classification if the regulations carry it out in a manner that, 

like the program in Bakke, gives preference based on race 

instead of individual experience. But as we have explained, 

Rothe has expressly disclaimed any challenge to the SBA’s 

implementation of section 637(a)(5) or to any other portions 

of the Small Business Act. As a result, the only question 

before us is whether the statute itself classifies based on race. 

Section 637(a)(5) makes no such classification. 

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B. 

Rothe alleges that the second component of the putative 

“racial classification of section 8(a)” is the “statutory goal” 

found at 15 U.S.C. § 644(g)(1) “to award a certain percentage 

of prime- and sub-contracts to socially disadvantaged small 

business concerns.” 1 App. 72-73 (Compl. ¶¶ 24-25). 

Section 644(g)(1) establishes several government-wide 

contracting targets, including an aspirational goal that at least 

five percent of the total value of the government’s prime 

contract and subcontract awards for each fiscal year go to 

“small business concerns owned and controlled by socially 

and economically disadvantaged individuals.” 15 U.S.C. 

§ 644(g)(1)(A)(iv). 

For starters, we take issue with Rothe’s characterization 

of section 644(g)(1)’s goal as part of the 8(a) program. It is 

not. While contracts let through the 8(a) program may help 

the government as a whole to meet section 644(g)’s 

objectives, section 644(g)’s goal is not itself a part of the 8(a) 

program. Id. § 644(g)(1); see DynaLantic Corp. v. U.S. Dep’t 

of Def., 885 F. Supp. 2d 237, 244-45 (D.D.C. 2012). Indeed, 

government contracts awarded to businesses owned by 

disadvantaged individuals without the benefit of programs 

such as the 8(a) program—that is, contracts they win through 

“unrestricted competition”—count toward section 644(g)’s 

goal. See 15 U.S.C. § 644(g)(2)(E). At any rate, section 

644(g)(1)’s goal is not a racial classification. Like section 

8(a), it refers to “socially and economically disadvantaged 

individuals”; it does not define the relevant business owners 

by their race. 

 

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C. 

Rothe points to a third component of the statute that it 

argues creates a “presumption that all individuals who are 

members of certain racial groups are socially disadvantaged.” 

1 App. 72 (Compl. ¶ 22). According to Rothe, the racial 

presumption can be found at 15 U.S.C. § 631(f)(1). Id.; see 

also Pl.’s Mem. in Supp. of Mot. Summ. J. at 8, Rothe Dev., 

Inc. v. Dep’t of Def., No. 12-cv-744 (D.D.C. May 15, 2014), 

ECF No. 56 (“The statute also contains an additional racial 

classification in a presumption that all individuals who are 

members of certain racial groups are socially disadvantaged. 

[15 U.S.C.] § 631(f)(1).”). But that provision creates no 

racial presumption or classification. 

Section 631(f), which falls under the heading 

“Declaration of policy,” is entitled “Findings; purpose.” 15 

U.S.C. § 631(f). The provision states Congress’s conclusion 

that it is in the nation’s interest “to expeditiously ameliorate 

the conditions of socially and economically disadvantaged 

groups,” id. § 631(f)(1)(D), so that socially and economically 

disadvantaged persons may fully participate in the economy 

and “obtain social and economic equality,” id. § 631(f)(1)(A). 

See also id. § 631(f)(2)(A) (declaring that one purpose of 

section 8(a) is to “promote the business development of small 

business concerns owned and controlled by socially and 

economically disadvantaged individuals so that such concerns 

can compete on an equal basis in the American economy”). It 

explains that “many [socially and economically 

disadvantaged] persons are socially disadvantaged because of 

their identification as members of certain groups that have 

suffered the effects of discriminatory practices or similar 

invidious circumstances over which they have no control.” 

Id. § 631(f)(1)(B). It goes on to observe “that such groups 

include, but are not limited to, Black Americans, Hispanic 

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Americans, Native Americans, Indian tribes, Asian Pacific 

Americans, Native Hawaiian Organizations, and other 

minorities.” Id. § 631(f)(1)(C) (emphasis added). According 

to Rothe, section 631(f)(1) creates a presumption that 

members of the listed groups, and racial minorities more 

generally, are socially disadvantaged and are thereby eligible 

to participate in the 8(a) program, absent a showing to the 

contrary. 

We disagree. Section 631(f)(1) is located in the findings 

section of the statute, not in the operative provision that sets 

forth the program’s terms and the criteria for participation. 

Section 637(a)(5) is where Congress defined the program’s 

terms. The statutory findings, by contrast, are just that—

findings about the social realities that Congress believed 

supported providing temporary business-development training 

and contracting opportunity to small disadvantaged firms. 

Preceded by the statement “Congress finds,” id. § 631(f)(1), 

they reflect Congress’s determination that many individual 

business owners were socially disadvantaged because people 

who would otherwise have done business with them assumed, 

based on their group-related identifiers (race, ethnicity or 

culture), that they had disqualifying shortcomings. Congress 

reasoned that business owners, underrated due to bias or 

prejudice, were likely to have been deprived of the 

opportunities and experiences that help small businesses to 

develop. Congress’s findings that individual business owners 

may have been unfairly subjected to race-based disadvantage 

do not, however, impose or necessarily contemplate any racebased classification in the statutory response, nor do such 

findings supplant the race-neutral definition of social 

disadvantage found in section 637(a)(5). 

As explained above, section 637(a)(5) does not classify 

on the basis of ethnicity or race. Findings, like a preamble, 

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may contribute to “a general understanding of a statute,” but, 

unlike the provisions that confer and define agency powers, 

they “are not an operative part of the statute.” Ass’n of Am. 

R.Rs. v. Costle, 562 F.2d 1310, 1316 (D.C. Cir. 1977). The 

EPA in Costle could not rely on the statutory preamble’s 

mention of “major noise sources” to limit the agency to 

regulating only those sources that were major in the face of 

operative statutory language imposing an obligation to 

regulate noise more generally. Id. The congressional findings 

here referring to specified racial and ethnic “groups that have 

suffered the effects of discriminatory practices” are just as 

inoperative for the purpose Rothe ascribes to them as was the 

preamble in Costle. 

There are many reasons Congress might have identified 

certain racial groups when announcing the policy behind the 

8(a) program. Congress might have wanted to offer 

paradigmatic examples of the problem or to send a signal of 

responsiveness to Americans of minority backgrounds, many 

of whom felt they lacked a fair shot at the American dream. 

But our concern in this case is not why Congress identified 

minority groups in section 631(f)(1), but whether, in doing so, 

it set special terms of preference for individuals based on their 

membership in a racial or ethnic minority group. Congress 

did not. Put simply, the preambulatory language of section 

631(f)(1), taken alone or together with section 637(a)(5), does 

not create a presumption that a member of a particular racial 

or ethnic group is necessarily socially disadvantaged, nor that 

a white person is not. 

The SBA’s first regulation implementing the statutory 

definition of social disadvantage lends support to that 

conclusion. See 13 C.F.R. Part 124.1-1(c)(3), 44 Fed. Reg. 

30672, 30674 (1979). That regulation acknowledged the 

statute’s reference to social disadvantage suffered by 

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members of statutorily identified groups, but eschewed 

presumptive eligibility based on group membership. The 

regulation required individualized social-disadvantage 

showings. It provided that “[t]he social disadvantage of 

individuals, including those within the above-named groups, 

shall be determined by the SBA on a case-by-case basis,” and 

further specified that “[m]embership alone in any group is not 

conclusive that an individual is socially disadvantaged.” Id. 

That regulation squarely contradicts the view that the statute 

forecloses the SBA from requiring “that every individual 

black American establish individual social disadvantage.” 

Dissent at 8. It demonstrates that the statute need not be 

implemented through a presumption that members of the 

named racial groups are, by token of their group membership, 

socially disadvantaged. 

D. 

The dissent points to a fourth component of the statute 

that it believes enacts a racial presumption subject to strict 

scrutiny—15 U.S.C. § 637(a)(8). Section 637(a)(8) states: 

All determinations made pursuant to [15 U.S.C. 

§ 637(a)(5), which defines socially disadvantaged 

individuals,] with respect to whether a group has been 

subjected to prejudice or bias shall be made by the 

Administrator after consultation with the Associate 

Administrator for Minority Small Business and 

Capital Ownership Development. 

According to the dissent, that provision makes membership in 

a particular racial or ethnic group a proxy for social 

disadvantage and directs the SBA to identify certain racial 

groups whose members will be presumed to be socially 

disadvantaged. Section 637(a)(8), the dissent contends, 

works together with section 637(a)(5)—the section defining 

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socially disadvantaged individuals—to operationalize 

Congress’s findings in section 631(f)(1). Together, our 

colleague contends, those components make clear that 

Congress created a racial presumption. See Dissent at 4-6, 

10-11. 

 

 For several reasons, however, we do not read section 

637(a)(8)’s reference to groups, whether alone or together 

with the other parts of the statute, as creating a racial 

presumption triggering strict scrutiny. 

Most importantly, the text of section 637(a)(8) does not 

create a racial presumption. It states that “[a]ll determinations 

made pursuant to [section 637(a)(5), which defines socially 

disadvantaged individuals,] with respect to whether a group 

has been subjected to prejudice or bias shall be made” by the 

SBA Administrator after consultation with the SBA official 

responsible for minority small business development. To be 

sure, that clause contemplates that the SBA will identify 

group-salient traits and accompanying forms of bias that it 

may consider when evaluating claims of social disadvantage. 

But we see nothing problematic about that. The definition of 

socially disadvantaged individuals makes reference to groups; 

it states that individuals who have been subject to bias 

because of their group-based characteristics may be eligible 

for the program. The dissent overlooks the second sentence 

of section 637(a)(8), which contemplates that “other” 

determinations, unrelated to group-based characteristics, may 

be made pursuant to section 637(a)(5), suggesting that the 

statute allows but does not require determinations about 

groups as part of section 637(a)(8)’s regulatory 

implementation. 

As we have explained, section 637(a)(8)’s definition of 

social disadvantage does not amount to a racial classification, 

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for it ultimately turns on a business owner’s experience of 

discrimination. Section 637(a)(8) shows that Congress was 

concerned with individuals’ experiences of disadvantage due 

to certain forms of cultural, ethnic, and racial prejudice. But 

it does not instruct the agency to limit the field to certain 

racial groups, or to racial groups in general, nor does it tell the 

agency to presume that anyone who is a member of any 

particular group is, by that membership alone, socially 

disadvantaged. 

As we read the statute, it neither contains any racial 

classification nor mandates the SBA to employ one. Even if 

the statute could be read to permit the agency to use a racial 

presumption, the canon of constitutional avoidance directs 

that we not construe the statute in a manner that renders it 

vulnerable to constitutional challenge on that ground. See

Pub. Citizen v. U.S. Dep’t of Justice, 491 U.S. 440, 466 

(1989) (“[W]here an otherwise acceptable construction of a 

statute would raise serious constitutional problems, the Court 

will construe the statute to avoid such problems unless such 

construction is plainly contrary to the intent of Congress.” 

(internal quotation marks omitted)). 

The dissent believes there is only one way to understand 

the statute—that it imposes a racial classification—and thus 

does not address our responsibility to avoid constitutional 

problems where a reasonable statutory reading so permits. 

But to reach the dissent’s view requires leaps. First, one 

would have to read section 637(a)(5), either on its own or in 

tandem with section 637(a)(8), not just to authorize but to 

require the agency to make group-based determinations of 

social disadvantage. See Dissent at 7-8. Second, one would 

have to believe that the language in the findings requires the 

agency to label all members of those particular groups 

disadvantaged by virtue of that membership alone. See id. at 

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6-7. We have identified reasons at each step to believe the 

opposite. And, “when deciding which of two plausible 

statutory constructions to adopt, a court must consider the 

necessary consequences of its choice. If one of them would 

raise a multitude of constitutional problems, the other should 

prevail . . . .” Clark v. Martinez, 543 U.S. 371, 380-81 

(2005). We decline to read the statute to create a 

constitutional difficulty. See INS v. St. Cyr, 533 U.S. 289, 

299-300 (2001). 

Several contextual considerations confirm that our 

reading of the text is the better reading: 

First, Congress affirmatively chose to jettison an express 

racial presumption that appeared in an earlier version of the 

bill. See INS v. Cardoza-Fonesca, 480 U.S. 421, 442-43 

(1987) (“Few principles of statutory construction are more 

compelling than the proposition that Congress does not intend 

sub silentio to enact statutory language that it has earlier 

discarded in favor of other language.” (citation omitted)). 

The House version offered two routes to eligibility in the 8(a) 

program. Individuals who were “Black Americans and 

Hispanic Americans” were presumed to be socially and 

economically disadvantaged. H.R. Rep. No. 95-949, at 16 

(1978). All other individuals had to demonstrate that they 

faced barriers to business formation, development, and 

success on account of social and economic forces beyond 

their control. Id. The House Committee explained that its 

race-based presumption of eligibility “[was] based upon the 

congressional findings” in the first part of the bill. Id. In 

contrast, the Senate version of the bill had no presumption 

and did not refer to any particular racial groups when defining 

social and economic disadvantage. See S. Rep. No. 95-1070, 

at 13-16, 25. Critically, the Conference Committee dropped 

the House’s presumption from the final version of the bill and 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 17 of 55
18 

opted, with section 637(a)(5)’s definition of socially 

disadvantaged individuals, for language much closer to the 

Senate’s version. See H.R. Rep. No. 95-1714, at 21-22. That 

is, Congress ultimately kept the House’s findings that racial 

minorities suffer social disadvantage but dropped the 

language that transformed that observation into a 

presumption. The conferees stressed that Congress was not 

granting the SBA authority “merely to channel contracts at a 

random pace to a preconceived group of eligibles for the sake 

of social or political goals.” Id. at 21-23. 

Second, why would Congress announce a racial 

presumption in the roundabout way Rothe envisions when it 

straightforwardly enacted a racial presumption elsewhere in 

the Small Business Act? See Russello v. United States, 464 

U.S. 16, 23 (1983) (When “Congress includes particular 

language in one section of a statute but omits it in another 

section of the same Act, it is generally presumed that 

Congress acts intentionally and purposely in the disparate 

inclusion or exclusion.” (citation omitted)). In section 8(d) of 

the Small Business Act—a provision not at issue in this 

case—Congress directed agencies to include in their prime 

contracts a clause for subcontracts that states, in part, that the 

“contractor shall presume that socially and economically 

disadvantaged individuals include Black Americans, Hispanic 

Americans, Native Americans, Asian Pacific Americans, and 

other minorities, and any other individual found to be 

disadvantaged by the Administration pursuant to section 8(a) 

of the Small Business Act.” 15 U.S.C. § 637(d)(3)(C)(ii). 

Section 8(d)’s express, race-based presumption was part of 

the Department of Transportation’s affirmative-action 

program at issue in Adarand Constructors, Inc. v. Peña, to 

which the Supreme Court applied strict scrutiny. 515 U.S. at 

205-07, 213. Whatever Congress’s reasons for directing 

private businesses to use race-based criteria under section 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 18 of 55
19 

8(d)’s subcontracting clause, Congress authorized more 

nuanced implementation by the agency under section 8(a). 

Other contracting programs likewise confirm that, when 

Congress wants to enact expressly race-based preferences, it 

knows how to do so. Take, for example, the Public Works 

Employment Act of 1977, Pub. L. 95-28, 91 Stat. 116 (1977), 

which Congress enacted just a year before section 8(a). It 

required that ten percent of federal funds granted to localities 

for public works projects be allocated for contracts with 

“minority business enterprises,” which Congress defined as 

businesses owned by “minority group members,” i.e., 

“citizens of the United States who are Negroes, Spanishspeaking, Orientals, Indians, Eskimos, and Aleuts.” See 

Fullilove v. Klutznick, 448 U.S. 448, 454 (1980) (opinion of 

Burger, C.J.) (quoting 42 U.S.C. § 6705(f)(2)).3

 In contrast to 

section 8(d) and the Public Works Employment Act, section 

8(a) benefits “socially disadvantaged” individuals, as defined 

by their experience of discrimination and not just their racial 

or ethnic group membership. 15 U.S.C. § 637(a)(5). 

It is worth noting that Congress enacted section 8(a) in 

1978, a generation before the Supreme Court held that even 

“benign” congressional classification by race triggers strict 

judicial scrutiny. It was not until 1995 that the Supreme 

Court held that expressly race-based preferences in federal 

contracting are subject to strict scrutiny. See Adarand, 515 

 3

 The Supreme Court in Fullilove sustained the Public Works 

Employment Act’s minority set-aside provision against an equal 

protection challenge on grounds that the Court in Adarand

substantially clarified. See Adarand, 515 U.S. at 236 (holding racebased affirmative action subject to strict judicial scrutiny, and 

noting that, “to the extent (if any) that Fullilove held federal racial 

classifications to be subject to a less rigorous standard, it is no 

longer controlling”). 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 19 of 55
20 

U.S. at 227. Congress’s use of the facially race-neutral 

social-disadvantage criteria in section 8(a) therefore cannot be 

cast as an effort to do covertly what Congress believed it 

could not do overtly. Rather, it is best understood as a 

considered effort to aid struggling entrepreneurs of all races 

who faced bias-induced barriers. In that respect, section 8(a) 

differs from expressly race-based statutes courts have 

subjected to strict scrutiny. See, e.g., Croson, 488 U.S. at 478 

(local contracting set-aside program identified eligible 

businesses as those owned by “minority group members,” 

specifically, “[c]itizens of the United States who are Blacks, 

Spanish-speaking, Orientals, Indians, Eskimos, or Aleuts”); 

Rothe Dev. Corp. v. Dep’t of Def., 545 F.3d 1023, 1027, 1050 

(Fed. Cir. 2008) (program incorporating section 8(d)’s 

express racial presumption subject to strict scrutiny); 

O’Donnell Constr. Co. v. District of Columbia, 963 F.2d 420, 

422 (D.C. Cir. 1992) (preliminarily enjoining program 

allocating 35% of D.C. contracts to “minority business 

enterprises,” where “minority” meant “Black Americans, 

Native Americans, Asian Americans, Pacific Islander 

Americans, and Hispanic Americans, who by virtue of being 

members of the foregoing groups, are economically and 

socially disadvantaged because of historical discrimination 

practiced against these groups by institutions within the 

United States of America”). 

Third, both the Supreme Court and this court’s 

discussions of the 8(a) program have identified the 

regulations—not the statute—as the source of its racial 

presumption. In Adarand, the Supreme Court noted that 

section 8(d) of the Small Business Act contains a race-based 

presumption. 515 U.S. at 207. But in describing the 8(a) 

program, the Adarand Court explained that the agency (not 

Congress) presumes that certain racial groups are socially 

disadvantaged and cited an SBA regulation (not the statute): 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 20 of 55
21 

“The SBA presumes that black, Hispanic, Asian Pacific, 

Subcontinent Asian, and Native Americans . . . are ‘socially 

disadvantaged.’” Id. (quoting 13 C.F.R. § 124.105(b)(1)); see 

also Fullilove, 448 U.S. at 463 (referring to “existing 

administrative programs promoting minority opportunity in 

government procurement, particularly those related to § 8(a) 

of the Small Business Act of 1953”). 

 We said something similar in DynaLantic, 115 F.3d 

1012. The question there was whether a business that was 

neither socially nor economically disadvantaged had standing 

to challenge the constitutionality of the 8(a) program, 

including the regulatory presumption of social disadvantage. 

Id. at 1013. We explained that “SBA regulations presume 

that, ‘[i]n the absence of evidence to the contrary,’ members 

of certain racial or ethnic groups—including Black, Hispanic, 

Native, Asian Pacific, and Subcontinent Asian Americans—

are socially disadvantaged.” Id. (emphasis added) (quoting 

13 C.F.R. § 124.105(b)(1)). And we referred specifically to 

the program’s “regulatory presumption.” Id. at 1017 

(emphasis added). 

Our conclusion that the statute lacks an express racial 

classification is also consistent with the holding of 

DynaLantic. Over the government’s objections, we held that 

the plaintiff in Dynalantic had standing. Id. at 1013, 1018. 

The government had argued that, even if the plaintiff’s 

challenge to the race-based regulatory presumption 

succeeded, the statutory basis for the program would stand 

because it was not race-based, and the plaintiff would 

continue to face competition from firms that qualified for 

participation under the race-neutral statutory criteria. Id. at 

1017. Therefore, the government asserted, even success on 

its equal protection claim could not redress the plaintiff’s 

injury. Id. We thought the government’s reading of the 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 21 of 55
22 

statute was “rather dubious” and were unwilling to “assume, 

certainly at [the pleading] stage of the litigation, that the 

statute itself [wa]s invulnerable” to constitutional challenge. 

Id.; but see id. at 1018 (Edwards, C.J., dissenting) (“The 

statutory set-aside is not limited in terms of race, so it does 

not prescribe a benefit that is available only to members of 

racial minorities.”). But, critically, we did not reject the 

government’s position; as the dissent correctly acknowledges, 

Dissent at 8, there was no need to reach it. “[I]f a favorable 

decision would lead only to the invalidation of the regulations 

. . . , Dynalantic’s injury would still be considerably 

mitigated,” so we left open the question whether 8(a) of the 

statute contained a racial classification. Id. at 1017 (majority 

op.); see United States v. Wade, 152 F.3d 969, 973 (D.C. Cir. 

1998) (explaining that, even if an earlier opinion could be 

read to reach the relevant issue, “[b]ecause that issue was not 

before the court, its overly broad language would be obiter 

dicta and not entitled to deference”). 

Fourth, as noted above, in its first implementation of the 

statutory definition of social disadvantage on the heels of its 

enactment in 1978, the agency required case-by-case 

determinations of social disadvantage. The agency used no 

race-based presumption, but specifically required evaluation 

of the claimed social disadvantage of any individual business 

owner seeking to qualify for the section 8(a) program, 

whether or not that person was a member of a racial or ethnic 

minority group deemed to be socially disadvantaged. The 

dissent suggests that the statute’s constitutional defect lies in 

its putative failure to “provide that ‘persons’ are socially 

disadvantaged because of their individual experiences of 

discrimination.” Dissent at 5. But that is precisely what the 

statute does provide. The agency’s initial implementing 

regulation illustrates how the statute might reasonably be 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 22 of 55
23 

enforced in the race-neutral manner that the dissent believes 

the statute forecloses. Id. 

Finally, the reality that Congress enacted section 8(a) 

with a consciousness of racial discrimination in particular as a 

source of the kind of disadvantages it sought to counteract 

does not expose the statute to strict scrutiny. Congress 

intended section 8(a) to secure “the opportunity for full 

participation in our free enterprise system [for] socially and 

economically disadvantaged persons” and to “improve the 

functioning of our national economy.” 15 U.S.C. 

§ 631(f)(1)(A). To be sure, Congress foresaw that “the 

primary beneficiaries of this program will be minorities.” 

H.R. Rep. No. 95-1714, at 22. But Rothe does not argue that 

the statute could be subjected to strict scrutiny, even if it is 

facially neutral, on the basis that Congress enacted it with a 

discriminatory purpose. See Pers. Adm’r of Mass. v. Feeney, 

442 U.S. 256, 279 (1979). In the absence of such a claim, we 

will not subject a facially race-neutral statute to strict 

scrutiny. Mere foreseeability of racially disparate impact, 

without invidious purpose, does not trigger strict 

constitutional scrutiny. Id. (“‘Discriminatory purpose’. . . 

implies more than intent as volition or intent as awareness of 

consequences.”).

Policymakers may act with an awareness of race—

unaccompanied by a facial racial classification or a 

discriminatory purpose—without thereby subjecting the 

resultant policies to the rigors of strict constitutional scrutiny. 

The Supreme Court has specified that “race may be 

considered in certain circumstances and in a proper fashion 

. . . . [M]ere awareness of race in attempting to solve the 

problems facing inner cities does not doom that endeavor [to 

foster diversity and combat racial isolation] at the outset.” 

Tex. Dep’t Hous. & Cmty. Affairs v. Inclusive Cmtys. Project, 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 23 of 55
24 

135 S. Ct. 2507, 2525 (2015); see Shaw v. Reno, 509 U.S. 

630, 646 (1993) (recognizing that certain forms of “race 

consciousness do[] not lead inevitably to impermissible race 

discrimination”); Parents Involved, 551 U.S. at 789 

(Kennedy, J., concurring) (noting several ways of pursuing 

diversity in education, such as strategic site selection and 

targeted recruitment, unlikely to trigger strict scrutiny because 

those “mechanisms are race-conscious but do not lead to 

different treatment based on a classification that tells each 

student he or she is to be defined by race”). 

As Justice Scalia wrote in his concurring opinion in City 

of Richmond v. J.A. Croson Company, 

A State can, of course, act “to undo the effects of past 

discrimination” in many permissible ways that do not 

involve classification by race. In the particular field of 

state contracting, for example, it may adopt a 

preference for small businesses, or even for new 

businesses—which would make it easier for those 

previously excluded by discrimination to enter the 

field. Such programs may well have racially 

disproportionate impact, but they are not based on 

race. 

488 U.S. 469, 526 (1989). The Supreme Court’s ensuing 

affirmative action decisions confirm that point by 

countenancing, and characterizing as “race neutral,” 

alternatives designed to advance the same ends as affirmative 

action programs but that do not rely on racial criteria. See, 

e.g., Fisher, 133 S. Ct. at 2420 (“[S]trict scrutiny imposes on 

the university the ultimate burden of demonstrating, before 

turning to racial classifications, that available, workable raceneutral alternatives do not suffice.”). Congress, in crafting 

section 8(a), was attentive to form as it sought to pursue 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 24 of 55
25 

plainly permissible ends. The lawmakers chose to advance 

equality of business opportunity and respond to 

discrimination by conditioning participation in the program 

on an individual’s experience of racial, ethnic, or cultural 

bias, rather than racial identity. We will not treat as 

constitutionally suspect an effort that avoids the hazards equal 

protection doctrine guards against. 

E. 

 Because the statute does not trigger strict scrutiny, we 

need not and do not decide whether the district court correctly 

concluded that it is narrowly tailored to meet a compelling 

interest. Rothe, 107 F. Supp. 3d at 206-11.4

 We instead 

consider whether it is supported by a rational basis. See 

Ysursa v. Pocatello Educ. Ass’n, 555 U.S. 353, 358-61 (2009) 

(upholding under rational-basis review a statutory provision 

after determining that strict scrutiny does not apply). It 

plainly is, for “it bears a rational relation to some legitimate 

end.” Romer v. Evans, 517 U.S. 620, 631 (1996). The statute 

aims to remedy the effects of prejudice and bias that impede 

business formation and development and suppress fair 

 4

 By the same token, we do not reach the parties’ debate over 

whether to review Rothe’s facial equal protection challenge under 

the standard set forth in United States v. Salerno, 481 U.S. 739, 745 

(1987), or a less demanding standard. Compare Rothe Dev. Corp. 

v. Dep’t of Def., 413 F.3d 1327, 1337-38 (Fed. Cir. 2005) 

(explaining that Salerno’s “no set of circumstances” standard is of 

“limited relevance” in analyzing a facial equal protection challenge 

to which strict scrutiny applies), with Sherbrooke Turf, Inc. v. 

Minn. Dep’t of Transp., 345 F.3d 964, 971 (8th Cir. 2003) 

(“Appellants’ facial challenge to the DBE program requires us to 

look carefully at DOT’s regulations to determine whether they may 

be constitutionally applied under any set of factual circumstances.” 

(citing Salerno, 481 U.S. at 746)). 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 25 of 55
26 

competition for government contracts. See S. Rep. No. 95-

1070, at 2. 

Counteracting discrimination is a legitimate interest; 

indeed, in certain circumstances, it qualifies as compelling. 

See Shaw v. Hunt, 517 U.S. 899, 909 (1996); Croson, 488 

U.S. at 492 (plurality op.) (“It is beyond dispute that any 

public entity, state or federal, has a compelling interest in 

assuring that public dollars, drawn from the tax contributions 

of all citizens, do not serve to finance the evil of private 

prejudice.”). And the statutory scheme is rationally related to 

that end. Congress conditioned participation in the 8(a) 

program on social disadvantage, defined as an individual’s 

experience of discrimination or bias. See 15 U.S.C. § 

637(a)(5). Because “[s]mall businesses owned and controlled 

by socially and economically disadvantaged individuals (most 

of whom are minority) receive a disproportionately small 

share of Federal purchases,” H.R. Rep. No. 100-460, at 18 

(1987), the program offers those participants technical 

assistance and the opportunity to bid on federal contracts in a 

sheltered market. The point of such sheltered markets is to 

provide disadvantaged business owners opportunities to gain 

management experience and build performance records—

chances they might otherwise lose to competitors unhindered 

by the disadvantages they have experienced as a result of bias 

and prejudice. The program therefore provides the benefits 

socially and economically disadvantaged individuals most 

need to participate on fair terms in the national economy. 

II. 

Rothe also appeals the district court’s decisions, pursuant 

to Federal Rule of Evidence 702, on the admissibility of the 

reports and deposition testimony of the government’s expert 

witnesses and the inadmissibility of the reports and deposition 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 26 of 55
27 

testimony of Rothe’s experts. In the context of the parties’ 

cross-motions for summary judgment, each side proffered 

their expert evidence as probative of whether the government 

has a compelling interest that would justify use of race in 

determining social disadvantage under the 8(a) program. We 

decline to review the district court’s admissibility 

determinations, for we would affirm district court’s grant of 

summary judgment to the defendants even if the district court 

abused its discretion in making those determinations. The 

expert witness testimony is not necessary to, nor in conflict 

with, our conclusion that section 8(a) is subject to and 

survives rational-basis review. 

III. 

Finally, Rothe contends that section 8(a) is an 

unconstitutional delegation of legislative power. The 

Constitution “permits no delegation of [legislative] powers, 

and so . . . when Congress confers decisionmaking authority 

upon agencies Congress must lay down by legislative act an 

intelligible principle to which the person or body authorized 

to act is directed to conform.” Whitman v. Am. Trucking 

Ass’ns, Inc., 531 U.S. 457, 472 (2001) (internal citations, 

quotation marks, and brackets omitted). According to Rothe, 

“Congress cannot delegate the power to racially classify. 

Alternatively, even if Congress can delegate it, the delegation 

here lacks the requisite intelligible principle.” Appellant Br. 

53. 

Rothe’s first argument is premised on the idea that 

Congress has created a racial classification. As we have 

explained, Congress has done no such thing. Rothe’s 

alternative argument also fails. Congress’s delegation of 

power to the SBA to enter into contracts with other federal 

agencies and subcontract with “socially and economically 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 27 of 55
28 

disadvantaged small business concerns,” 15 U.S.C. 

§ 637(a)(1)(A) & (B), “is no broader than other delegations 

that direct agencies to act in the ‘public interest,’ or in a way 

that is ‘fair and equitable,’ or in a manner ‘requisite to protect 

the public health,’ or when ‘necessary to avoid an imminent 

hazard to the public safety,’” each of which the Supreme 

Court has upheld against nondelegation challenges. Nat’l 

Mar. Safety Ass’n v. Occupational Safety & Health Admin., 

649 F.3d 743, 755 (D.C. Cir. 2011) (citations omitted). 

Congress’s definition of “socially disadvantaged” in 

15 U.S.C. § 637(a)(5) provides further “intelligible” guidance 

to the SBA to implement the 8(a) program. 

* * * 

For the foregoing reasons, we affirm the district court’s 

grant of summary judgment to the government defendants. 

So ordered. 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 28 of 55
KAREN LECRAFT HENDERSON, Circuit Judge, concurring 

in part and dissenting in part: 

Judges must beware of hard constructions and 

strained inferences; for there is no worse 

torture than the torture of the laws. 

 Sir Francis Bacon

 Essays, “Of Judicature,” LVI 

My colleagues hold that the provisions of the Small 

Business Act (Act) at issue in this case are “facially raceneutral.” See Maj. Op. at 3. I disagree. And I am in good 

company. The appellant believes the statute contains a racial 

classification.1 The appellees believe the statute contains a 

racial classification.2 The district court held that the statute 

contains a racial classification.3

 The Small Business 

Administration’s (SBA) implementation follows from its 

 1

 See Appellant’s Br. 2–3 (statutory definition of “socially 

disadvantaged,” the “presumption that all individuals who are 

members of certain racial groups are socially disadvantaged,” and 

the “goal to award a certain percentage” of government contracts 

“to socially disadvantaged small business concerns” together 

“comprise ‘section 8(a)’s racial classification’ ”). 

2

 See Appellees’ Br. 16 (“Strict scrutiny applies because 

Section 8(a) employs a race-conscious rebuttable presumption to 

define socially disadvantaged individuals.”). 

3

 Rothe Dev., Inc. v. Dep’t of Def., 107 F. Supp. 3d 183, 207 

(D.D.C. 2015) (“There is no question that ‘racial classifications’ 

such as the ones at issue here ‘are constitutional only if they are 

narrowly tailored measures that further compelling governmental 

interests.’ ” (emphasis added) (alteration and quotation marks 

omitted) (quoting DynaLantic Corp. v. Dep’t of Def., 885 

F. Supp. 2d 237, 250 (D.D.C. 2012))). 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 29 of 55
2 

view that the statute contains a racial classification.4

 And to 

top it off, this court found my colleagues’ approach “rather 

dubious” nearly twenty years ago.5

 The chorus swells. 

But we need not take the chorus’s word for it. Their 

voices simply confirm what the language of the Act makes 

plain enough. The majority’s analysis, in contrast, is 

fundamentally flawed, assuming that a statute that does not 

classify exclusively on the basis of race must necessarily be 

 4

 When the SBA first promulgated the regulatory presumption 

on December 1, 1980, it stated: “Congress did not mean to bestow 

8(a) program benefits indiscriminately on small business persons.” 

Definition of Social Disadvantage, 45 Fed. Reg. 79,413, 79,414 

(Dec. 1, 1980). “Rather, it sought to single out for special 

treatment those persons who have had greatest difficulty, through 

no fault of their own, in achieving a competitive position in the 

business world. Hence, its designation of members of certain 

minority groups as socially disadvantaged.” Id. (emphasis added). 

The SBA also made plain that, in promulgating the regulation, it 

“adhered to the legislative intent behind Pub. L. 95-507: that 

statutorily designated racial and ethnic minorities be the primary 

beneficiaries of the 8(a) program, but that other disadvantaged 

individuals be eligible for the program.” Id. at 79,413 (emphasis 

added). 

5

 That case involved a company’s standing to pursue a 

constitutional challenge to the section 8(a) program. See 

DynaLantic Corp. v. Dep’t of Def., 115 F.3d 1012, 1013 (D.C. Cir. 

1997). The government argued “that the 8(a) statute is not itself 

race-conscious; only the implementing SBA regulations are.” Id. at 

1017. The majority found “the government’s statutory analysis [to 

be] rather dubious.” Id. “[T]he Act,” the court went on, “includes 

as a congressional finding that certain racial groups—the same 

groups as are identified in [the SBA regulation]—are socially 

disadvantaged.” Id. (second emphasis added) (citing 15 U.S.C. 

§§ 631(f)(1)(B), (C)).

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 30 of 55
3 

“facially race-neutral.” Maj. Op. at 3. The majority’s appeals 

to statutory context, legislative history and relevant case law 

likewise miss the mark. On this issue, I respectfully part 

company with my colleagues.6

I. Section 8(a) of the Small Business Act 

Contains a Racial Classification 

“Most laws classify,” Pers. Adm’r of Mass. v. Feeney, 

442 U.S. 256, 271 (1979), and the Small Business Act is no 

exception. Indeed, the section 8(a) program at issue classifies 

in all sorts of ways; as an example, for certain government 

contracts, it offers a preference to businesses that are “small” 

if owned by “socially disadvantaged” individuals who are 

also “economically disadvantaged.” See 15 U.S.C. § 637(a). 

The issue here is whether section 8(a)’s classifications are, on 

their face, race neutral, see Maj. Op. at 3, or if they instead 

“distribute[] burdens or benefits” on the basis of race, see 

Parents Involved in Cmty. Sch. v. Seattle Sch. Dist. No. 1, 551 

U.S. 701, 720 (2007). The inquiry boils down to this: Does 

the Act provide members of certain racial groups an 

advantage in qualifying for section 8(a)’s contract preference 

 6

 I concur in the affirmance of summary judgment to the 

government on the non-delegation issue. See Maj. Op. at 27–28. 

My colleagues also conclude that we need not review the district 

court’s evidentiary decisions because “[t]he expert witness 

testimony is not necessary to, nor in conflict with, our conclusion 

that section 8(a) is subject to and survives rational-basis review.” 

Id. at 27. Because I believe we should apply strict scrutiny rather 

than rational-basis review to the challenged provisions of the Act, 

however, I disagree with my colleagues on the issue. Nevertheless, 

my dissent is limited to identifying the correct standard of review 

rather than its application and therefore the district court’s 

evidentiary holdings are beyond its scope. See infra n.8. 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 31 of 55
4 

by virtue of their race? A review of its key provisions 

manifests that it does. 

Section 8(a)(5) is the starting point. It defines “socially 

disadvantaged individuals” as “those who have been 

subjected to racial or ethnic prejudice or cultural bias because 

of their identity as a member of a group without regard to 

their individual qualities.” 15 U.S.C. § 637(a)(5) (emphases 

added). Moreover, two other statutory provisions confirm 

that section 8(a)(5) of the Act (and not only the SBA’s 

implementing regulations) favors certain races in qualifying 

for participation in the section 8(a) program. 

The first of these provisions is section 8(a)(8). It 

provides that “[a]ll determinations made pursuant to 

paragraph [8(a)(5)] with respect to whether a group has been 

subjected to prejudice or bias shall be made by the 

Administrator after consultation with the Associate 

Administrator for Minority Small Business and Capital 

Ownership Development.” Id. § 637(a)(8) (emphasis added). 

The use of “group” here is key. Id. It confirms that the focus 

of the inquiry under section 8(a)(5) is a “determination[]” of 

whether an individual is “socially disadvantaged” by virtue of 

his membership in a group that has suffered racial/ethnic 

“prejudice” or cultural “bias.” See id. § 637(a)(5), (8). It is 

group membership—and the prejudice or bias the group has 

experienced—that triggers social disadvantage. See id. If, as 

my colleagues conclude, see Maj. Op. at 7–9, section 8(a)(5) 

instead demanded an inquiry into an individual’s own 

experience of discrimination, section 8(a)(8) would read 

something like “all determinations made pursuant to 

paragraph [8(a)(5)] with respect to whether an individual has 

been subject to prejudice or bias . . . .” But it does not. 

Instead, the Congress plainly made the “group” criterion 

preeminent. 

USCA Case #15-5176 Document #1634830 Filed: 09/09/2016 Page 32 of 55
5 

Why that is so becomes abundantly clear when sections 

8(a)(5) and 8(a)(8) are considered in light of section 2(f) of 

the Act. Section 2(f) is worth quoting at length: 

[W]ith respect to the [SBA’s] business 

development programs the Congress finds— 

(A) that the opportunity for full 

participation in our free enterprise system by 

socially and economically disadvantaged 

persons is essential if we are to obtain social 

and economic equality for such persons and 

improve the functioning of our national 

economy; 

(B) that many such persons are socially 

disadvantaged because of their identification 

as members of certain groups that have 

suffered the effects of discriminatory practices 

or similar invidious circumstances over which 

they have no control; [and] 

(C) that such groups include, but are not 

limited to, Black Americans, Hispanic 

Americans, Native Americans, Indian tribes, 

Asian Pacific Americans, Native Hawaiian 

Organizations, and other minorities . . . . 

15 U.S.C. § 631(f)(1)(A)–(C) (footnote omitted). 

Like section 8(a)(8), section 2(f)(1)(B) connects social 

disadvantage to membership in certain “groups.” Id.

§ 631(f)(1)(B). Notably, section 2(f)—like 8(a)(8)—does not 

provide that “persons” are socially disadvantaged because of 

their individual experiences of discrimination. Rather, they 

are socially disadvantaged “because of their identification as 

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6 

members of certain groups that have suffered the effects of 

discriminatory practices or similar invidious circumstances 

over which they have no control.” Id. (emphasis added). 

The message is clear—groups suffer discrimination and 

therefore persons who are members of those groups are 

socially disadvantaged. See id. 

Section 2(f) also designates “Black Americans, Hispanic 

Americans, Native Americans, Indian tribes, Asian Pacific 

Americans, Native Hawaiian Organizations, and other 

minorities” as “such groups” that “have suffered the effects of 

discriminatory practices or similar invidious circumstances 

over which they have no control.” Id. § 631(f)(1)(B)–(C). 

When read in pari materia, these two provisions are crystal 

clear: if an individual is a “Black American[], Hispanic 

American[], Native American[], [member of an] Indian 

tribe[], Asian Pacific American[], [or] [member of a] Native 

Hawaiian Organization[],” the individual is “socially 

disadvantaged” because those “groups” have “suffered the 

effects of discriminatory practices or similar invidious 

circumstances.” Id. Likewise with “other minorities”—if an 

individual is a member of an unlisted minority group, he is 

deemed “socially disadvantaged.” Id.

In my view, then, the Congress has set a floor for 

participation in the section 8(a) program: members of the 

statutorily identified groups are deemed to be “socially 

disadvantaged.” See id. Under section 8(a)(8), the SBA may, 

over time, determine that “a group has been subjected to 

prejudice or bias” and add it to the running list. Id.

§ 637(a)(8). This is why section 8(a)(8) directs the SBA to 

focus on groups (not individuals) that have experienced 

discrimination in making its social-disadvantage decisions, 

id.—the Congress itself was focused on the discrimination 

experienced by groups in making its own findings about 

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7 

social disadvantage, see id. § 631(f)(1)(B)–(C). Nothing in 

the statute prohibits an individual from making a showing that 

his membership in a group not listed has made him “subject[] 

to racial or ethnic prejudice or cultural bias.”7 Id. § 637(a)(5). 

But “Black Americans, Hispanic Americans, Native 

Americans, Indian tribes, Asian Pacific Americans, [and] 

Native Hawaiian Organizations” are statutorily deemed to be 

“socially disadvantaged” under the Act because the Congress 

itself has declared that “members of [these] groups . . . have 

suffered the effects of discriminatory practices or similar 

invidious circumstances over which they have no control.” 

Id. § 631(f)(1)(B)–(C). 

An example may help to illustrate the Act’s operation. 

The SBA’s implementing regulations, tracking the Act, 

presume that members of certain racial groups are socially 

disadvantaged but individuals who are “not members of [the] 

designated groups . . . must establish individual social 

disadvantage by a preponderance of the evidence.” See 13 

C.F.R. § 124.103(b)–(c) (prescribing “a rebuttable 

 7

 Because section 2(f) limits the reach of groups that “have 

suffered the effects of discriminatory practices or similar invidious 

circumstances” to “other minorities,” 15 U.S.C. § 631(f)(1)(B)–(C), 

a racial non-minority (i.e., a white) plainly cannot qualify for the 

program based on “racial . . . prejudice,” id. § 637(a)(5). A white 

would have to show social disadvantage based on his membership 

in a minority group that has experienced “cultural bias” or “ethnic 

prejudice.” Id. The legislative history provides one example—“a 

poor Appalachian white person who has never had the opportunity 

for a quality education or the ability to expand his or her cultural 

horizons.” H.R. Rep. No. 95-1714, at 22 (1978) (Conf. Rep.). But 

the fact that a white can qualify for the section 8(a) preference does 

not render the statute race-neutral. See infra 15–18.

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8 

presumption” that members of “designated groups” “are 

socially disadvantaged”). “Black Americans” currently lead 

the list of designated groups, the members of which are 

presumed to be socially disadvantaged. Id. § 124.103(b)(1). 

Assume, however, that the SBA were to decide that black 

Americans as a group are no longer subject to prejudice or 

bias and therefore black Americans as a group are no longer 

entitled to the regulatory presumption. Could the SBA 

remove them from the list of presumed socially disadvantaged 

groups and require instead that every individual black 

American establish individual social disadvantage by a 

preponderance of the evidence? I think not, because such 

action would conflict with the congressional finding that 

“Black Americans” as a group are socially disadvantaged, see 

15 U.S.C. § 631(f)(1)(C), and the SBA would have exceeded 

its statutory authority. Instead, congressional action would be 

required to “delist” any of the statutorily designated minority 

groups. See, e.g., Bowen v. Georgetown Univ. Hosp., 488 

U.S. 204, 208 (1988) (“It is axiomatic that an administrative 

agency’s power to promulgate legislative regulations is 

limited to the authority delegated by Congress.”).

I am far from the first to read the Act this way. We 

suggested this relationship between the statute and the racebased regulatory presumption—that the race-based statute 

demands race-based regulations—in DynaLantic Corp. v. 

Department of Defense. See 115 F.3d 1012, 1017 n.3 (D.C. 

Cir. 1997). Although we did not decide in DynaLantic 

whether the statute contains a racial classification, we noted 

that “[t]he statute itself actually might require race-conscious 

regulations.” Id. (emphasis in original). We then cited 15 

U.S.C. §§ 631(f)(1)(B) and (C), followed by a parenthetical 

stating, “(congressional finding that certain racial groups are 

socially disadvantaged).” Id. We found the Defense 

Department’s contention to the contrary—“that the 8(a) 

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9 

statute is not itself race-conscious”—to be “rather dubious,” 

explaining that “the Act includes as a congressional finding

that certain racial groups—the same groups as are identified 

in [the regulation]—are socially disadvantaged.” Id. at 1017 

(emphasis in original). “In this respect,” we said, “the 8(a) 

provisions are much like the program in [Regents of the 

University of California v.] Bakke: ‘a minority enrollment 

program with a secondary disadvantage element.’ ” Id.

(quoting Regents of the Univ. of Cal. v. Bakke, 438 U.S. 265, 

281 n.14 (1978)). 

Here, the appellees’ reading of the relationship between 

the statute and regulations echoes our suggested reading in 

DynaLantic, 115 F.3d at 1017 n.3. They did not raise any noracial-classification-in-the-statute defense in their briefs and, 

when asked at oral argument about a potential distinction 

between the regulation’s racial presumption and the alleged 

lack of one in the Act, the appellees’ counsel held fast to her 

position that the race-based SBA regulations flow directly 

from the statute. See Oral Arg. Tr. 25:6–13 (“[W]hat we’re 

arguing is that SBA is just carrying out what is in the statute, 

that Congress provided the standards in the statute, and SBA 

in the regulations are [sic] just applying what’s in the statute, 

the standards in the statute.”); see id. at 26:3–7 (“[T]he SBA 

is just implementing what Congress has in the statute, so you 

have to see what Congress knew, and the SBA is just 

following what Congress has said.”). 

The moral of the story is that the congressional findings 

set forth in section 2(f) of the Act constrain the SBA’s 

discretion in making “socially disadvantaged” determinations 

under section 8(a)(5), see 15 U.S.C. § 637(a)(5), and those 

determinations are tied—by statute—to group, not individual, 

discrimination, see id. § 637(a)(8). One of those 

constraints—and a critical one—is that the Congress has 

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10 

designated certain racial groups and other minorities as 

socially disadvantaged. See id. § 631(f)(1)(C). Accordingly, 

if not rebutted, the SBA must presume members of those 

groups are socially disadvantaged. 

In my view, section 8(a) contains a paradigmatic racial 

classification. The Congress has “distribute[d] . . . [a] 

benefit” to members of statutorily-designated racial groups 

because of their membership therein, see Parents Involved, 

551 U.S. at 720; namely, they are not required to meet the 

same standard in establishing their eligibility to participate in 

the section 8(a) program that members of non-minority races 

must satisfy. Accordingly, I agree with the parties and the 

district court that we should apply strict scrutiny in 

determining whether the section 8(a) program violates 

Rothe’s right to equal protection of the laws.8

 8

 According to the majority, I “believe[] there is only one way 

to understand the statute . . . and thus do[] not address our 

responsibility to avoid constitutional problems where a reasonable 

statutory reading so permits.” Maj. Op. at 16. But where there is

only one well-founded way to read a statute, it is emphatically not 

our responsibility to avoid constitutional difficulties. See, e.g., 

McFadden v. United States, 135 S. Ct. 2298, 2306–07 (2015) 

(constitutional-avoidance canon “has no application in the 

interpretation of an unambiguous statute” (internal quotation marks 

omitted)). Here, however, the majority’s invocation of the canon is 

particularly flimsy for two reasons: First, the canon is ultimately “a 

means of giving effect to congressional intent, not of subverting it,” 

Clark v. Martinez, 543 U.S. 371, 382 (2005), and, not to belabor 

the point, but if the Congress did not intend section 8(a) to classify 

on the basis of race, one wonders why it envisioned that 

“determinations [would be] made . . . with respect to whether a 

group has been subjected to prejudice or bias,” see 15 U.S.C. 

§ 637(a)(8), or found that certain racial groups “have suffered the 

effects of discriminatory practices or similar invidious 

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11 

II. The Majority Misreads Section 8(a) 

I believe the majority’s race-neutral reading is flawed in 

at least three major respects. First, it fails to give in pari 

materia reading to sections 8(a)(5), 8(a)(8) and 2(f). See Maj. 

Op. at 11–14. Second, it mistakenly assumes that, because a 

member of a non-minority race (i.e., a white) can participate 

in the section 8(a) program, the statute must be race-neutral. 

See Maj. Op. at 7–9. Third, the legislative history, statutory 

context and relevant case law it cites do not support its 

interpretation. See Maj. Op. at 17–23. I address each in turn. 

 

circumstances over which they have no control,” see id.

§ 631(f)(1)(B)–(C). But second, and perhaps more fundamentally, 

“the purpose of strict scrutiny is to ‘smoke out’ illegitimate uses of 

race by assuring that the legislative body is pursuing a goal 

important enough to warrant use of a highly suspect tool.” City of 

Richmond v. J.A. Croson Co., 488 U.S. 469, 493 (1989) (plurality 

opinion). Those efforts would be severely hamstrung if it were the 

“responsibility,” Maj. Op. at 16, of courts to force doubtful 

readings on statutes to avoid conducting that “searching 

examination,” Fisher v. Univ. of Texas at Austin, 133 S. Ct. 2411, 

2419 (2013). I recognize that, at times, courts have been less than 

unequivocal in specifying a tier of scrutiny when greater clarity 

plainly would not affect the statute’s constitutionality, see, e.g., 

Tuan Anh Nguyen v. I.N.S., 533 U.S. 53, 60–61 (2001); however, I 

cannot say at this early stage whether that would be true here. 

Nonetheless, recognizing that the Supreme Court, at times, has also 

thought it important to specify the degree of scrutiny even when 

doing so would not change the outcome, see City of Cleburne, Tex. 

v. Cleburne Living Ctr., 473 U.S. 432, 435 (1985), I see little 

reason to “avoid,” Maj. Op. at 16, the threshold question of how 

searching our review should be.

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12 

A. Section 2(f) Should Be Given Effect

The majority discounts the significance of section 2(f) of 

the Act by emphasizing that it “is located in the findings 

section of the statute, not in the operative provision that sets 

forth the program’s terms and the criteria for participation.” 

Maj. Op. at 12. There are several problems with this 

approach. 

First, our precedent makes plain that, “although the 

language in the preamble of a statute is ‘not an operative part 

of the statute,’ it may aid in achieving a ‘general 

understanding’ of the statute.” Wyo. Outdoor Council v. U.S. 

Forest Serv., 165 F.3d 43, 53 (D.C. Cir. 1999) (quoting Ass’n 

of Am. R.Rs. v. Costle, 562 F.2d 1310, 1316 (D.C. Cir. 1977)). 

Indeed, we have found an agency’s decision arbitrary and 

capricious when it construed a statute without addressing 

“important language” in congressional findings. See Ass’n of 

Am. R.Rs. v. Surface Transp. Bd., 237 F.3d 676, 680–81 (D.C. 

Cir. 2001). Yet the majority brushes off section 2(f). See 

Maj. Op. at 12–13. I believe its approach conflicts with our 

above-cited case law. 

Second, even those cases that discount reliance on 

congressional findings do so only if a party uses the findings 

to manufacture ambiguity in an otherwise unambiguous 

statute. See, e.g., Costle, 562 F.2d at 1316 (“Where the 

enacting or operative parts of a statute are unambiguous, the 

meaning of the statute cannot be controlled by language in the 

preamble.” (emphasis added)); id. (“We find the reference[s] 

[in the operative portion of the statute] to be unambiguous 

and, therefore, do not look to the preamble for guidance as to 

the legislative intent.”); accord Nat’l Wildlife Fed’n v. EPA, 

286 F.3d 554, 570 (D.C. Cir. 2002); see also Jurgensen v. 

Fairfax Cnty., Va., 745 F.2d 868, 885 (4th Cir. 1984) (no 

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13 

need to look to findings if relevant statute is “clear and 

unambiguous”). Despite the majority’s protestations to the 

contrary, see Maj. Op. at 12–13, the language of section 8(a) 

is not unambiguous. See Costle, 562 F.2d at 1316. 

Moreover, reading sections 8(a)(5) and 8(a)(8) together with 

section 2(f) to create a statutory presumption that the 

designated groups are socially disadvantaged does not 

conflict with either “operative” provision. Under this reading, 

all three provisions say the same thing: membership in a 

minority group that, according to the Congress, has 

experienced prejudice or bias produces social disadvantage. 

The same is not true of the majority’s reading, which ignores 

section 2(f) and fails to reconcile its hyper-individualized 

reading of section 8(a)(5) with the Congress’s group-focused 

directive in section 8(a)(8). See Maj. Op. at 11–16. 

Third, to call the congressional findings here a preamble 

is “somewhat of a misnomer.” Ivy Sports Med., LLC v. 

Burwell, 767 F.3d 81, 93 (D.C. Cir. 2014) (Pillard, J., 

dissenting). Traditionally, a “preamble” to a statute is a 

“prefatory explanation or statement” that “customarily 

precedes the enacting clause[9] in the text of a bill, and 

consequently is frequently understood not to be part of the 

law.” NORMAN SINGER & SHAMBIE SINGER, 1A SUTHERLAND 

 9

 An enacting clause is “the part of [an] act’s body stating 

precise action taken by the legislature.” NORMAN SINGER &

SHAMBIE SINGER, 1A SUTHERLAND STATUTES & STATUTORY 

CONSTRUCTION § 20:6 (7th ed. 2008). The enacting clause in 

federal legislation—“Be it enacted by the Senate and House of 

Representatives of the United States of America in Congress 

assembled”—has remained remarkably consistent throughout the 

nation’s history. Compare Native American Children’s Safety Act, 

Pub. L. No. 114-165, 130 Stat. 415, 415 (June 3, 2016), with Act of 

June 1, 1789, ch. 1, 1 Stat. 23, 23. 

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STATUTES & STATUTORY CONSTRUCTION § 20:3 (7th ed. 

2008). It was just such a “preamble” the Supreme Court 

discussed in Yazoo & M.V.R. Co. v. Thomas, 132 U.S. 174 

(1889), a case in which the Mississippi legislature had 

included a lengthy “whereas” statement before the enacting 

clause in legislation that chartered a railroad. See Act of 

February 17, 1882, ch. 541, 1882 Miss. Laws 838, 838. It 

was in that context—where “the preamble [was] no part of 

the act”—that the Court said it could “not enlarge or confer 

powers, nor control the words of the act, unless they are 

doubtful or ambiguous.” Yazoo, 132 U.S. at 188. In 

Association of American Railroads v. Costle, we applied the 

same rule to congressional findings, 562 F.2d at 1316, even 

though those findings appeared after the enacting clause, see 

Noise Control Act of 1972, Pub. L. No. 92-574, § 2, 86 Stat. 

1234, 1234.10 In doing so, we cited only one case—Yazoo. 

See Costle, 562 F.2d at 1316 n.30. We never acknowledged, 

however, that the preamble in the Mississippi legislation at 

issue in Yazoo differed from the enacted congressional 

findings in the Noise Control Act of 1972. Our cases citing 

Costle have likewise not noted the critical difference, 

primarily because they involved administrative, not statutory, 

preambles. See, e.g., Nat’l Wildlife Fed’n, 286 F.3d at 569–

70; Wyo. Outdoor Council, 165 F.3d at 54. 

In my view, then, we should read Costle with a grain of 

salt; at the very least, we should be cautious before applying 

the Supreme Court’s admonition about the minimal effect of 

 10 The “preamble,” if any, in the Noise Control Act of 1972 

more closely resembles a title, to wit: “An Act [t]o control the 

emission of noise detrimental to the human environment, and for 

other purposes.” Noise Control Act of 1972, Pub. L. No. 92-574, 

86 Stat. 1234, 1234. The text of the law, including the enacting 

clause and the findings, then follows. See id. §§ 1–18. 

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an unenacted preamble to provisions the Congress saw fit to 

enact into law. I read Costle to mean that enacted findings do 

not “control[]” if they conflict with unambiguous, so-called 

“operative” provisions of a particular statute, see Costle, 562 

F.2d at 1316, but Costle does not hold that enacted findings 

are only an interpretative last resort. Instead, we must attempt 

to read the entire Act—including duly enacted findings—as 

one “harmonious whole.” See FDA v. Brown & Williamson 

Tobacco Corp., 529 U.S. 120, 132–33 (2000) (“It is a 

fundamental canon of statutory construction that the words of 

a statute must be read in their context and with a view to their 

place in the overall statutory scheme . . . [and] [a] court must 

therefore . . . fit, if possible, all parts into an harmonious 

whole . . . .” (internal quotation marks omitted)).11 

B. Racial Classification Is Not Affected 

 By “Other” Classifications 

My colleagues also think the statute is race-neutral 

because “section [8](a)(5)’s plain terms permit individuals of 

any race to be considered ‘socially disadvantaged.’ ” See 

Maj. Op. at 9. Not so. Although a white business owner can

qualify for the program, he nonetheless remains at a 

disadvantage in establishing his eligibility relative to a 

member of a racial minority group. Assume an admissions 

policy that sets quotas for “disadvantaged” students and also 

presumes that both black students and students whose 

socioeconomic level are below a certain threshold regardless 

of race are “disadvantaged.” The policy plainly classifies on 

the basis of race; simply because it also classifies on a 

 11 The majority’s various criticisms of my reading, e.g., that I 

“overlook[]” certain language, Maj. Op. at 15, and that I read 

“groups” to exclude “individual” experiences of discrimination, id.

at 22–23, primarily reflect that I read the statute as a whole 

(including 2(f)) and my colleagues choose not to.

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16 

different, non-racial basis does not mean the race-based 

portions somehow become race-neutral. The same is true 

here. By designating members of certain racial minorities as 

socially disadvantaged, and using social disadvantage to 

separate out those who are presumed eligible to participate in 

the 8(a) program from those who must prove their eligibility, 

the Act classifies on the basis of race. See 15 U.S.C. 

§§ 631(f)(1)(B)–(C), 637(a)(5), (8). 

For this reason, my colleagues’ attempt to distinguish the 

relevant provisions of the Act from the admissions policy at 

issue in Regents of the University of California v. Bakke, 438 

U.S. 265 (1978), is largely unavailing. See Maj. Op. at 8–9. 

The racial classification in Bakke was two-fold; the Medical 

School of the University of California at Davis set aside 

sixteen seats to be filled by “disadvantaged” students through 

a “special admissions program,” 438 U.S. at 274–75, and the 

“special admissions program involve[d] a purposeful, 

acknowledged use of racial criteria,” id. at 289 n.27. As the 

majority puts it, “an explicit factor in determining 

disadvantage was an applicant’s race.” Maj. Op. at 8 (citing 

Bakke, 438 U.S. at 274–75 & n.4). So, too, with the section 

8(a) program. The Congress has ordered that certain 

contracts be set aside for “socially disadvantaged” 

individuals, 15 U.S.C. § 637(a), and has declared that 

members of certain racial groups are presumed to be socially 

disadvantaged, id. § 631(f)(1)(C). It cannot get much more 

“explicit” than that. See Maj. Op. at 8. 

The only real difference between the program in Bakke

and the 8(a) program is that, although whites could apply for 

admission through the “special admissions program” for 

“disadvantaged” students in Bakke, see 438 U.S at 274–76 & 

n.5, “[w]hite disadvantaged students were never considered” 

to be disadvantaged, id. at 281 n.14. In contrast, a white 

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17 

business owner may be able to establish individual social 

disadvantage under the section 8(a) program, at least pursuant 

to the terms of the Act. See 15 U.S.C. § 637(a)(5). But the 

difference is immaterial. It makes little sense to say that the 

section 8(a) program is race-neutral because it only demotes 

non-minority applicants rather than locking them out entirely. 

Just as the Bakke program’s “purposeful . . . use of racial 

criteria” in deciding who had access to certain medical-school 

seats drew “a line . . . on the basis of race and ethnic status,” 

438 U.S. at 289 & n.27, so too does the section 8(a) 

program’s use of racial criteria in deciding who has automatic 

access to certain contracts.

The Supreme Court’s decision in Grutter v. Bollinger, 

539 U.S. 306 (2003), drives home the point. There, the 

University of Michigan Law School’s admission policy 

“aspire[d] to achieve that diversity which has the potential to 

enrich everyone’s education and thus make a law school class 

stronger than the sum of its parts.” Id. at 315 (internal 

quotation marks omitted). The policy did not “define 

diversity solely in terms of racial and ethnic status”; rather, it 

“recognize[d] many possible bases for diversity admissions.” 

Id. at 316 (internal quotation marks omitted). Nevertheless, 

because the law school specifically considered race as one 

measure of diversity, id., thereby giving minority applicants 

an advantage in the admissions process, the Court subjected 

the policy to strict scrutiny, see id. at 326–27. Similarly, in 

the section 8(a) context, although social disadvantage can 

result without regard to race, race remains—by statute—a 

necessary part of the socially disadvantaged inquiry. See 15 

U.S.C. § 637(a)(5), (8); see also id. § 631(f)(1)(B)–(C). That 

the program allows non-minority participation does not erase 

the race-based presumption contained therein and we must, 

accordingly, subject that presumption to strict scrutiny. See, 

e.g., Adarand Constructors, Inc. v. Pena, 515 U.S. 213, 227 

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18 

(1995) (“race-based rebuttable presumption” is racial 

classification that “must be analyzed by a reviewing court 

under strict scrutiny”); see also Grutter 539 U.S. at 322–26; 

id. at 323 (“[W]hen governmental decisions ‘touch upon an 

individual’s race or ethnic background, he is entitled to a 

judicial determination that the burden he is asked to bear on 

that basis is precisely tailored to serve a compelling 

governmental interest.’ ” (emphasis added) (quoting Bakke, 

438 U.S. at 299)). 

C. Section 8(a)’s Legislative History, Context 

 and Case Law Do Not Support “No Racial 

 Classification” Reading 

Finally, I believe the majority’s reading of the legislative 

history, statutory context and relevant case law does not 

support its conclusion that the relevant provisions of the Act 

are race neutral. 

1. Legislative History 

The majority claims that the Congress’s decision to strike 

a more explicit race-based presumption means that the statute 

as finally written lacks a racial classification. See Maj. Op. at 

17–18. It makes hay of the Conference Committee’s decision 

to endorse what appears to be a compromise between a 

rebuttable presumption in favor of Black Americans and 

Hispanic Americans originally adopted by the House,12

see 

 12 The presumption the House adopted read: “The [SBA] 

shall presume that socially and economically disadvantaged groups 

and group members include, but are not limited to, Black 

Americans and Hispanic Americans.” H.R. 11318, 95th Cong. 

§ 202 (1978), available at 124 CONG. REC. 7,529–30 (Mar. 20, 

1978).

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19 

H.R. Rep. No. 95-949, at 16 (1978), and the provision the 

Senate adopted, directing the SBA to determine social 

disadvantage based on “whether the owner or owners of the 

applicant have been deprived of the opportunity to develop 

and maintain a competitive position in the economy due to 

cultural bias, general economic deprivation or other similar 

causes,” S. Rep. No. 95-1070, at 37 (1978). 

But the legislative history cuts both ways. In describing 

the amended language, the Conference Report makes plain 

that the trigger point is membership in a group that has 

experienced discrimination (and not exclusively individual 

discrimination): “The amendment . . . stat[es] that socially 

disadvantaged persons are those who have been subject to 

racial or ethnic prejudice or cultural bias (regardless of their 

individual qualities or personal attributes) because they have 

been identified as a member of certain groups that have 

generally suffered from prejudice or bias.” H.R. Rep. No. 

95-1714, at 21–22 (Conf. Rep.) (emphases added). “In other 

words,” the Report goes on, “because of present and past 

discrimination many minorities have suffered social 

disadvantagement.” Id. at 22 (emphasis added). 

Moreover, reading sections 8(a)(5), 8(a)(8) and 2(f) to 

provide a race-based classification does not require 

concluding that the Congress must have enacted sub silentio

what it had previously rejected, see Maj. Op. at 17–18. Under 

the original House provision, only Black Americans and 

Hispanic Americans were presumed to be socially 

disadvantaged; an individual who was not a member of one of 

these two groups had to show “impediments to establishing, 

maintaining, or expanding a small business concern which are 

not generally common in kind or degree to all small business 

persons and which result from both social and economic 

causes over which such individual has no control.” H.R. Rep. 

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20 

No. 95-949, at 24–25. The definition of social disadvantage 

ultimately enacted, however, is different—it focuses on 

“prejudice” or “bias” experienced because of group 

membership, 15 U.S.C. § 637(a)(5), not on business-specific 

impediments. Further, by using a definition of social 

disadvantage that allows for both group-based and individualbased showings of “racial or ethnic prejudice” or “cultural 

bias” (also naming a handful of socially disadvantaged 

groups, id. § 631(f)(1)(C), and authorizing the SBA to add 

others, see id. § 637(a)(8)), the Congress signaled to the SBA 

that racial minorities were not to be the only beneficiaries of 

the program. In discussing the changes to the House 

provision, the Congress went out of its way to make plain that 

“the Conferees realize that other Americans may also suffer 

from social disadvantagement because of cultural bias” and to 

offer the example of the “poor Appalachian white.” See H.R. 

Rep. No. 95-1714, at 22 (Conf. Rep.). Notably, this is how 

the SBA came to understand “the legislative intent behind 

[the Act]: that statutorily designated racial and ethnic 

minorities be the primary beneficiaries of the 8(a) program, 

but that other disadvantaged individuals be eligible for the 

program.” Definition of Social Disadvantage, 45 Fed. Reg. 

79,413, 79,413 (Dec. 1, 1980) (emphasis added). 

In addition, although the Act eliminated the House’s 

explicit presumption, it included the House’s findings—

which formed the basis for the presumption in the first 

place—and rejected the Senate’s—which did not list any 

racial groups. See H.R. Rep. No. 95-1714, at 21 (Conf. Rep.); 

see also S. Rep. No. 95-1070, at 36–37. Specifically, the 

Conference Committee noted that the House findings 

“establish the premise that many individuals are socially and 

economically disadvantaged as a result of being identified as 

members of certain groups, including but not limited to, black 

Americans and Hispanic Americans.” H.R. Rep. No. 95-

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21 

1714, at 20 (Conf. Rep.). The Committee “adopt[ed] the 

House findings” and expanded the list to include Native 

Americans. Id. at 21. It also described the import of the 

House findings: “[I]n many, but not all, cases[,] status as a 

minority can be directly and unequivocally correlated with 

social disadvantagement and this condition exists regardless 

of the individual, personal qualities of that minority person.” 

Id. (emphasis added). The legislative history thus confirms 

my reading of the statute’s plain meaning—that the Congress 

understood its findings to designate certain racial groups as 

socially disadvantaged notwithstanding the fact that its 

definition of social disadvantage in section 8(a)(5) is open to 

members of non-racial but nonetheless minority groups 

(including whites who by location or otherwise are members 

of an ethnic/cultural minority). 

One other piece of legislative history noticeably absent 

from the majority’s analysis illustrates that the Congress’s 

own views on how the statute operates are consistent with my 

own. When the Congress originally enacted section 2(f) of 

the Act in 1978, it recognized only “Black Americans, 

Hispanic Americans, [and] Native Americans” (along with 

the open-ended “other minorities”) as groups that were 

socially disadvantaged. See Act of Oct. 24, 1978, Pub. L. 95-

507, § 201, 92 Stat. 1757, 1760. Several months later, the 

SBA made an administrative finding that “Asian Pacific 

Americans” also comprised “a minority group which has 

members who are socially disadvantaged because of their 

identification as members of this group, for the purposes of 

eligibility for SBA’s section 8(a) program.” Designation of 

Eligibility Asian Pacific Americans Under Section 8(a) and 

8(d) of the Small Business Act, 44 Fed. Reg. 42,832, 42,832 

(July 20, 1979). At that time, the SBA had not yet 

promulgated the regulatory presumption designating certain 

groups as presumptively disadvantaged; rather, it listed the 

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22 

statutorily-designated racial groups but it made disadvantage 

decisions on a “case-by-case” basis. See The Small Business 

and Capital Ownership Development Program, 44 Fed. Reg. 

30,672, 30,674 (May 29, 1979). The administrative finding 

meant only that Asian Pacific Americans were added to the 

list of groups that had experienced discrimination. See id.

In 1980, however, the Congress added “Asian Pacific 

Americans” to the list of socially disadvantaged groups set 

out in section 2(f) of the Act. See Act of July 2, 1980, Pub. L. 

No. 96-302, § 118, 94 Stat. 833, 840. The legislative history 

of the 1980 Amendment is telling. A May 1980 House Small 

Business Committee Report states: “Present law specifies 

that, subject to certain specified constraints, ‘socially 

disadvantaged’ persons include ‘black Americans, Hispanic 

Americans, native Americans and other minorities.’ 

Therefore, these named groups are afforded a presumption of 

‘social disadvantage.’ ” H.R. Rep. No. 96-998, at 2 (1980) 

(emphases added). To repeat, at this point, the SBA had not 

yet promulgated any regulatory presumption of social 

disadvantage. See 44 Fed. Reg. at 30,674. The House Report 

goes on to state that the “bill would provide that Asian-Pacific 

Americans be afforded the same presumption of ‘social 

disadvantage’ as extended under present law to ‘black 

Americans’, ‘Hispanic Americans’, and ‘native Americans’.” 

H.R. Rep. No. 96-998, at 3 (emphases added). The 

Conference Report on the final legislation similarly states, 

“Present law specifies that, subject to certain specified 

constraints, ‘socially disadvantaged’ persons include ‘Black 

Americans, Hispanic Americans, Native Americans and other 

minorities.’ ” H.R. Rep. No. 96-1087, at 35 (1980) (Conf. 

Rep.); accord S. Rep. No. 96-703, at 10 (1980) (Senate Select 

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23 

Committee on Small Business report on Senate bill with 

virtually identical provision).13

It was on December 1, 1980—only after the legislation 

adding Asian Pacific Americans was enacted—that the SBA 

first updated its regulations—by way of an interim rule—to 

provide for a presumption in favor of the statutorily 

designated racial groups. See Definition of Social 

Disadvantage, 45 Fed. Reg. at 79,413–14. In doing so, it 

noted that “[s]ince Congress has found that Black Americans, 

Hispanic Americans, Native Americans, and, with the 

enactment of Pub. L. 96-302 on July 2, 1980, Asian Pacific 

Americans, are socially disadvantaged, members of those 

groups need not, as a general rule, present an individualized 

case of social disadvantage.” Id. at 79,414. The history of 

the relevant legislation—as well as the regulations that follow 

it—conforms exactly to my reading. The Congress enacted a 

statutory presumption of social disadvantage for members of 

certain racial groups, acknowledged that presumption in 

adding Asian Pacific Americans to its list of groups and the 

SBA then followed suit in implementing that presumption 

through race-based regulations. 

2. Statutory Context 

The majority also claims that the Congress’s use of a 

more “straightforward[]” racial presumption in section 8(d)(3) 

belies my reading of section 8(a). See Maj. Op. at 18–19. 

 13 The majority apparently reads the SBA’s initial 1979 

regulation as set in amber, Maj. Op. at 13–14, because it gives no 

weight to the fact that, just one year later, the Congress itself, in 

adding Asian-Pacific Americans to the socially disadvantaged 

groups, intended those groups to be “presumed” socially 

disadvantaged, as the legislative history discussed above makes 

clear.

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Because the Congress knows how to spell out an explicit 

presumption—as it did in section 8(d)(3)—a more explicit 

presumption in section 8(a) is also required. See id. I 

disagree. Whereas section 8(a) is a statutory directive to the 

SBA that sets forth an overall framework for eligibility in a 

government contract-preference program, see 15 U.S.C. 

§ 637(a), section 8(d)(3) specifies contractual language the 

Congress requires federal agencies to use in an effort to 

ensure that prime contractors hire—as subcontractors—

businesses owned by socially and economically 

disadvantaged individuals, see id. § 637(d)(3). Indeed, unlike 

section 8(a), which contemplates detailed implementation by 

the SBA, see id. § 637(a), section 8(d)(3)’s language is meant 

to be included automatically in each contract with no 

individual assessment—instead, it uses the SBA’s section 

8(a)(5) determinations, see id. § 637(d)(3)(C) (“The 

contractor shall presume that socially and economically 

disadvantaged individuals include . . . any other individual 

found to be disadvantaged by the [SBA] pursuant to section 

8(a) of the Small Business Act.”). Given the different 

contexts, that the Congress would use different language to 

further the same overall goal should come as no surprise. See 

Deal v. United States, 508 U.S. 129, 134 (1993) (“Congress 

sometimes uses slightly different language to convey the 

same message . . . .” (internal quotation marks omitted)). 

Indeed, the majority’s reading suggests the Congress 

sought to achieve different ends with these two provisions. 

The majority believes that, via section 8(a), the Congress 

wants the SBA to award prime contracts to small businesses 

based exclusively on the business owner’s showing that he 

has personally experienced “prejudice” or “bias.” See Maj. 

Op. at 8; see also 15 U.S.C. § 637(a)(5). But when it comes 

to awarding contracts to subcontractors, the Congress wants 

prime contractors to presume that members of certain 

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groups—the same groups listed in section 2(f) of the Act, no 

less—are socially disadvantaged with no individualized 

showing needed. Id. § 637(d)(3)(C). Why would the 

Congress want the government to award prime contracts 

using a different standard from the one it requires prime 

contractors to use in subcontracting? The majority offers no 

explanation. Mine, then, is the better reading—although the 

contractual provision uses different language, its eligibility 

inquiry program uses the racial classification provided in 

section 8(a). 

3. Case Law 

Finally, the majority asserts that “the Supreme Court and 

this court’s discussions of the 8(a) program have identified 

the regulations—not the statute—as the source of its racial 

presumption.” Maj. Op. at 20. The assertion is only partly 

true. Both the Supreme Court and this court have, like my 

colleagues, noted that the SBA’s implementing regulations 

are race-based. See Adarand, 515 U.S. at 207; DynaLantic, 

115 F.3d at 1013. But the Supreme Court has never held that 

the Act does not contain a racial classification, nor have we. 

The statements the majority plucks from Adarand do not 

support any negative inference. The majority claims that 

“[i]n describing the 8(a) program, the Adarand Court 

explained that the agency (not Congress) presumes that 

certain racial groups are socially disadvantaged and cited an 

SBA regulation (not the statute)” for support; thus, in my 

colleagues’ view, the Court must have meant that the Act 

does not classify on the basis of race. See Maj. Op. at 20–21. 

The smoking gun, it says, is the Court’s use of the words 

“[t]he SBA presumes” in describing the relevant racial 

classification. See id. at 21 (quoting Adarand, 515 U.S. at 

207). But other statements the Court makes in Adarand show 

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that it was not trying to distinguish between statute and 

regulation. For example, after explaining that “[t]he SBA

presumes” social disadvantage for certain racial groups under 

the section 8(a) program, the Court declared that under the 

“8(d) subcontracting program,” “the SBA presumes social 

disadvantage based on membership in certain minority 

groups” and the Court again cites to SBA regulations. 

Adarand, 515 U.S. at 207 (emphasis added). By the 

majority’s logic, this must mean that it is the SBA 

regulations—and “not the statute,” Maj. Op. at 20—that 

contain a racial classification under the 8(d) program. But, as 

discussed, supra at 23–24, my colleagues point to the 

statutory presumption in section 8(d) as the exemplar of a 

statutory race-based presumption. See Maj. Op. at 18–19. 

This illustrates a simple point—Adarand’s use of “the SBA 

presumes,” 515 U.S. at 207, is irrelevant here. Adarand, 

which considered the entirety of the SBA programs at issue—

including plainly race-based statutes and regulations—says 

precious little about whether the provisions of the Act 

applicable to the section 8(a) program contain a racial 

classification. 

The same is true of DynaLantic. Although we plainly 

acknowledged that the regulations classify on the basis of 

race, see 115 F.3d at 1013, 1017, we did not hold that the 

statute does not. To the contrary, we were unwilling then to 

reach the conclusion that my colleagues now press, i.e., that 

the statute is race-neutral. See id. at 1017. We labeled such 

an interpretation “rather dubious,” id., and noted that the 

statute “might require race-conscious regulations” based on 

the congressional findings in section 2(f). Id. at 1017 n.3 

(emphasis in original). Indeed, the only portion of 

DynaLantic that supports my colleagues’ reading is the 

dissent. See id. at 1019 (Edwards, J., dissenting) (“The 

legislation that creates the 8(a) set-aside does not define 

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27 

social and economic disadvantage in terms of race.”). But the 

dissent was a dissent for a reason—the majority was 

unconvinced by its reading of the statute. In sum, neither of 

the cases my colleagues put forward bolsters their view of the 

statute; Adarand offers no help and the majority’s conclusion 

in DynaLantic supports my reading of the statute, not theirs. 

* * * 

Although “[i]t is emphatically the province and duty of 

the judicial department to say what the law is,” Marbury v. 

Madison, 5 U.S. 137, 177 (1803), we should not cast aside the 

consensus of those charged with drafting and implementing a 

particular statute without strong reasons for doing so. We are 

not bound by the parties’ agreement that the statute includes a 

racial classification. See supra nn.1–2. Nor are we bound by 

the district court’s interpretation, see supra n.3, or by the 

longstanding view of the SBA, see supra n.4. Nor, in this 

case, are we bound by our DynaLantic language; the 

determinative jurisdictional issue there did not require 

deciding whether the Act contains a racial classification. See

115 F.3d at 1017–18. But when such a chorus of voices rises 

in favor of a particular statutory interpretation, we should be 

slow to turn a deaf ear. In my view, the statutory language is 

plain and, for the reasons stated, the majority’s defense of its 

alternative reading falls short of the mark. I would hold that 

the challenged portions of the Small Business Act include a 

racial classification and would therefore subject them to strict 

scrutiny. 

Accordingly, I respectfully dissent. 

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