HR-2689-117
Ordered to be Reported in the Nature of a Substitute (Amended) by the Yeas and Nays: 28 - 23.
Sponsored by Al Green (D-TX)
What it does
This bill would permanently authorize the Minority Business Development Agency (MBDA), which previously operated without a permanent statutory foundation. It would require the MBDA to provide business assistance, promote minority business enterprises (MBEs) in local and international markets, and collect data on factors affecting MBE success. The bill would also create new grant programs for nonprofit organizations serving MBEs, direct grants to MBEs themselves, entrepreneurship education grants for certain colleges, and formal structures for existing MBDA business center programs.
Who benefits
Minority business owners and entrepreneurs who would gain access to expanded MBDA services, grants, and business center support. Minority-serving institutions of higher education eligible for entrepreneurship education grants. Nonprofit organizations whose primary activity is serving MBEs, which would become eligible for new federal grants. Residents of rural communities served by the MBDA Rural Business Center Program. Researchers and policymakers who would benefit from new MBDA data collection and GAO reporting on program outcomes.
Who is hurt
Taxpayers who fund the expanded and permanently authorized federal programs, as the bill would increase federal spending without a defined sunset. Non-minority-owned small businesses that compete for contracts, customers, or capital but would not be eligible for the targeted grant programs or MBDA services. Federal agencies and the broader budget process, which would face a permanent spending obligation rather than a periodically reviewed one. Businesses or institutions that do not meet the bill's eligibility criteria for grants or center services.
Supporters argue
Supporters argue that minority-owned businesses face documented, systemic barriers to capital access, contracting opportunities, and market entry that have persisted for decades, and that targeted federal support is a proportionate response to those documented disparities. They contend that permanently authorizing the MBDA would give the agency the stable legal footing it needs to plan long-term programs, attract partnerships, and deliver consistent services — rather than operating in a legal gray area. Supporters also argue that strengthening MBEs produces broader economic benefits, including job creation in underserved communities, expanded tax revenue, and reduced reliance on other federal assistance programs. The bill's data collection and GAO oversight requirements, they say, build in accountability mechanisms that ensure taxpayer dollars are spent effectively and that programs are adjusted based on evidence.
Opponents argue
Opponents argue that creating race- or ethnicity-based eligibility criteria for federal grants and agency services raises serious equal protection concerns, and that permanently authorizing such a program without a sunset clause removes the periodic congressional review that ensures accountability. They contend that the bill duplicates services already available through the Small Business Administration and other federal agencies, adding bureaucratic overhead without evidence that a separate agency produces better outcomes for small businesses. Opponents also argue that directing grants specifically to minority-owned businesses disadvantages equally situated non-minority small businesses facing the same capital and market challenges, and that a more effective approach would be need-based or geography-based criteria available to all small businesses. The lack of a defined funding cap or spending ceiling, they say, creates an open-ended fiscal commitment that Congress has not fully evaluated.
Constitutional context
The bill's primary constitutional basis is the Commerce Clause (Art. I, §8), which grants Congress authority to regulate interstate commerce, and the Necessary and Proper Clause, which supports legislation reasonably related to that power. The use of race- or ethnicity-based eligibility criteria implicates the Fifth Amendment's Due Process Clause, which the Supreme Court has interpreted to require equal protection at the federal level (Bolling v. Sharpe, 1954). Post-SFFA (2023) scrutiny of race-conscious federal programs is heightened. The grant structure also raises Spending Clause questions about conditions attached to federal funds. Loper Bright v. Raimondo (2024) is relevant because courts will now independently review MBDA's statutory interpretations rather than deferring to the agency, meaning the bill's language defining "minority business enterprise" and program eligibility will face closer judicial scrutiny.
Checks and balances
The bill would expand executive branch authority by permanently authorizing the MBDA — an agency within the Department of Commerce — and granting it new rulemaking, grant-making, and program administration powers. Congress retains oversight through the required GAO report on program outcomes. The Spending Clause framework keeps Congress in control of appropriations, but permanent authorization removes the leverage of periodic reauthorization votes. Courts would serve as a check on agency interpretations of eligibility criteria, particularly under the post-Loper Bright standard of independent judicial review.
Historical precedent
The MBDA was originally established by Executive Order 11625 (1971) under President Nixon and has operated without permanent statutory authorization since then. Prior minority business assistance legislation includes the Small Business Act's Section 8(a) program and the Disadvantaged Business Enterprise program under surface transportation law, both of which have faced constitutional challenges on equal protection grounds (Adarand Constructors v. Peña, 1995).