Untitled Texas Attorney General Opinion: KP-0505

January 19, 2026

Opinion No. KP-0505

Re: “Diversity, Equity, and Inclusion” in Texas

The worth of a person cannot be measured by race, sex, or any other immutable feature
bestowed at birth—beyond the reach of individual choice. Rather, people are to be judged by the
quality of their character and skill they have worked to obtain. Ours is a merit-based society.

This moral imperative preexists any political or legal document. Still, the concept is
engrained within each of the sovereign charters under which Texans conduct all affairs: the U.S.
and Texas Constitutions. Over the course of decades, however, some people have become obsessed
with the notion that race and sex are to shape every opportunity in public and private life. Under
the tacit guise of sociological reparations, this broken worldview—better known as “Diversity,
Equity, and Inclusion” or “DEI,” under which immutable traits have become the currency of
advancement—has invaded academia, the halls of government, and virtually every corner of
private industry. But no one can be freed by the hand of injustice that once bound them.

To make matters worse, when given an opportunity to confront DEI in the context of higher
education, then-Attorney General Cornyn not only declined to give an answer but withdrew the
only actionable guidance on the topic. See generally Tex. Att’y Gen. Op. No. JC-0107 (1999)
(withdrawing Tex. Att’y Gen. LO-97-001 (1997)). Adding insult to injury, he deferred to a pending
Fifth Circuit court decision without any guidelines with which to navigate the legal morass that is
DEI. Id. This was as wrong then as it is now, and the opinion is overruled. 1

As the “chief law officer of the State” with solemn duties “involving at all times the
exercise of broad judgment and discretion,” Webster v. Comm’n for Law. Discipline, 704 S.W.3d
478, 495 (Tex. 2024) (citation omitted), the Attorney General is dutybound to clarify the current
state of the law and right the wrongs of prior administrations. Doing so compels that we observe
the obvious: DEI has no place in our Republic, and the time for evaluating any candidate,
employee, or recipient of government largesse based on their skin color or sex has come to an end.
We therefore begin by detailing the arc of our nation’s commitment to first principles,
see infra Part I, and then analyze the extent to which DEI has unlawfully invaded both the public
and private sectors alike, see infra Parts II–III (addressing each, respectively).

1
For similar reasons, Attorney General Opinions JC-0315 (2000), DM-226 (1993), and DM-184 (1992) are
also overruled to the extent inconsistent with this opinion. See infra Part II.A.
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I. Historical and legal backdrop

A. First principles among the United States

The Declaration of Independence consecrated the American revolution with “self-evident”
truths—rooted in equal liberty, not feigned equity. THE DECLARATION OF INDEPENDENCE para. 2
(U.S. 1776). It declared that “one people” could “dissolve the political bands [that] ha[d] connected
them with another[] . . . to assume . . . [their] separate and equal station” because “all men are
created equal.” Id. All were likewise united in their “unalienable rights,” including that to “Life,
Liberty and the pursuit of Happiness.” Id. But these were “not . . . new principles[] or new
arguments, never before thought of.” Letter from Thomas Jefferson to Henry Lee (Monticello May
8, 1825), https://tjrs.monticello.org/letter/436#X3184736. Instead, the Declaration embodied a
“common sense . . . expression of the American mind.” Id.

That shared consciousness was steeped in a familiar reality: “[N]othing [was] more
evident” than mankind’s endowment to “the same advantages of nature” and “the use of the same
faculties[] . . . without subordination or subjection.” JOHN LOCKE, SECOND TREATISE OF
GOVERNMENT ch. 2, § 4 (1690). Over a century of Jurisprudence—from Locke to Hobbes,
Blackstone, and Montesquieu—observed that all were born into “a state of perfect freedom” and
thus “equality, wherein all . . . power and jurisdiction is reciprocal.” Id.; accord 1 MONTESQUIEU,
The SPIRIT OF LAWS bk. VIII, ch. 3 (1777) (noting “[i]n the state of nature, indeed, all men are
born equal”); 1 WILLIAM BLACKSTONE, COMMENTARIES *127 (1765) (noting “[t]he absolute rights
of every Englishman . . . are founded on nature and . . . are coeval with our form of government”);
THOMAS HOBBES, LEVIATHAN 76 (1651) (noting “[n]ature hath made men so equal in the faculties
of body and mind . . . that” none can “claim to himself any benefit to which another may not
pretend as well as he”). This sat comfortably beside mankind’s accepted “inequalit[ies] . . . [in]
virtue, talents, taste, and acquirements” because “all . . . [were] equal” in “natural rights and
duties,” meaning “the weak and artless” could not be deprived of “their small acquisitions” any
more than “the strong and artful” could be loosed of “their large ones.” JAMES WILSON, LECTURES
ON LAW (1789–1791), in 1 THE WORKS OF THE HONOURABLE JAMES WILSON 283, 308
(Bird Wilson ed., 1804) (highlighting that none could validly “claim, in preference to another,
superior right” or “authority”); accord JAMES WILSON, CONSIDERATIONS ON THE NATURE AND
EXTENT OF THE LEGISLATIVE AUTHORITY OF THE BRITISH PARLIAMENT 3 (1774) (observing “[a]ll
. . . are, by nature, equal and free”). At bottom, the “equal rights of nature” could not justify
“exalting one man . . . above the rest” and betrayed the traditional “distinction of men into kings
and subjects.” THOMAS PAINE, COMMON SENSE (1776), reprinted in THE GREAT WORKS OF
THOMAS PAINE 12 (D.M. Bennett 1878); accord ALEXANDER HAMILTON,
THE FARMER REFUTED (1775), reprinted in 1 THE WORKS OF ALEXANDER HAMILTON (Henry
Cabot Lodge ed., Fed. ed. 1904).
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Of course, this backdrop was not lost by the summer of 1787. Statesmen drawn from the
newly united states—some of whom had shaped the Declaration itself, 2 cf. VA DECLARATION OF
RIGHTS, § 1 (June 12, 1776)—convened to frame the Declaration’s “apple of gold” with a
constitutional “picture of silver.” 4 COLLECTED WORKS, supra, at 168–69. To that end, the Framers
did not vault equity of condition over the Lockean equality that called them to Philadelphia; they
openly acknowledged that “inequality” would “result from” and “exist as long as . . . liberty
itself.” 3 THE FEDERAL CONVENTION AND THE FORMATION OF THE UNION OF THE AMERICAN
STATES 166 (Winton U. Solberg ed., 1958). Free society came with “diversity in the faculties of
men,” which in turn produced unequal fruits of their labor as well as “division . . . into different
interests and parties.” THE FEDERALIST NO. 10, at 73 (James Madison) (C. Rossier ed., 1999); see
also, e.g., JAMES WILSON, LECTURES ON LAW (1789–1791), in 1 THE WORKS OF THE HONOURABLE
JAMES WILSON, supra, at 308 (disclaiming equality of “virtues,” “talents,” “dispositions,” or
“acquirements”). Yet “the mortal disease[] under which popular governments . . . perished” did
not lie in the cause of these factions; it was the “factious spirit [that] tainted . . . public
administrations.” FEDERALIST NO. 10, supra, at 71–72 (James Madison); accord NOAH WEBSTER,
THE REVOLUTION IN FRANCE (1794), in 2 Political Sermons of the American Founding Era, 1730–
1805, at 1271 (Ellis Sandoz ed., 1991) (observing the French and Roman revolutions also revealed
the “faction” as “death to the existing government” (emphasis omitted)).

“[W]hether amounting to a majority or a minority of the whole,” factions were no less
“united and actuated by some common impulse of passion[] . . . adversed to the rights of other
citizens[] or . . . [the] aggregate interests of the community.” FEDERALIST NO. 10, supra, at 72
(emphases added); see also id. at 79 (forecasting these “wicked project[s]” could include a “rage
for paper money, for an abolition of debts, [and] for an equal division of property”). A government
held captive to this self-interested spirit could not be ransomed “by destroying the liberty . . .
essential to its existence” or “by giving to every citizen the same opinions,” “passions,” and
“interests.” Id. at 72–73. The latter was “as impracticable as the first . . . unwise.” Id. at 73. Neither
could the nation rely on “enlightened statesmen” to “adjust these clashing interests[] and render
them all subservient to the public good” when, ultimately, “statesmen [would] not always be at the
helm.” Id. at 75. As a result, “the diseases most incident to republican government” called for a
democratic republic that could “break and control the violence of faction,” id. at 71, 78–79—to

2
Thomas Jefferson famously began with George Mason’s draft of the Virginia Declaration of Rights, which
first professed “that all men are born equally free and independent.” PAULINE MAIER, AMERICAN SCRIPTURE: MAKING
THE DECLARATION OF INDEPENDENCE 104 (1997) (citing GEORGE MASON, FIRST DRAFT OF THE VIRGINIA
DECLARATION OF RIGHTS § 1 (1776)).
3
Other influential figures—like John Adams, who was then serving as Ambassador to Great Britain—also
expressed the same view, going as far to suggest it was “gross . . . fraud” to teach “that all Men are born with equal
Powers and Faculties,” “to equal Influence,” or “to equal property and Advantages through Life.” Letter from John
Adams to John Taylor (Apr. 19, 1814), FOUNDERS ONLINE, NAT’L ARCHIVES, https://founders.archives.gov/
documents/Adams/99-02-02-6282; see also, e.g., 6 CHARLES FRANCIS ADAMS, THE WORKS OF JOHN ADAMS, SECOND
PRESIDENT OF THE UNITED STATES 8–9 (Charles C. Little & James Brown eds., 1851) (observing a government set on
“making all things common to all” would be “scandal fastened by the cunning of the common enemy upon this kind
of government”).
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secure the blessings of liberty. See also, e.g., FEDERALIST NO. 51, supra, at 317–22 (James
Madison) (highlighting how the government’s architecture guards against “majority faction”).

Unsurprisingly, the Declaration’s proto-constitutional force continued in the years ahead.
Various states echoed Lockean equality in their own declarations, e.g., DEL. DECLARATION OF
RIGHTS OF 1776, § 10; N.C. DECLARATION OF RIGHTS OF 1776, arts. I, III; PA. DECLARATION OF
RIGHTS OF 1776, art. I; VT. DECLARATION OF RIGHTS OF 1777, art. I, or constitutional preambles—
New York going as far as to incorporate the entire Declaration, N.Y. CONST. OF 1777, pmbl.; see
also, e.g., PA. CONST. OF 1776, pmbl.; VT. CONST. OF 1777, pmbl. Yet more placed corresponding
provisions into their full constitutions. E.g., MD. CONST. OF 1776, § 10; N.H. CONST. OF 1784,
arts. I–II. In the public square, too, America’s statesmen commended the degree to which these
sovereign charters were “conformable to the Declaration.” Letter from Thomas Paine to the
Citizens of Pennsylvania, on the Proposal for Calling a Convention (Aug. 1805), in 2 THE
POLITICAL AND MISCELLANEOUS WORKS OF THOMAS PAINE 161, 169 (London, R. Carlile 1819)
(commenting on the Pennsylvania Constitution); see also, e.g., John Quincy Adams, Letter to the
Editors of the Old Colony Memorial, the Hingham Patriot, and the Quincy Patriot, in the Twelfth
Congressional District of Massachusetts, July 23 1841, LIBERATOR, Aug. 20, 1841, at 134
(highlighting Massachusetts’ shared foundation in “universal human liberty”). Thus while Europe
had embraced “charters of liberty . . . granted by power,” the United States championed “charters
of power granted by liberty.” JAMES MADISON, CHARTERS (Jan. 19, 1792), in JAMES MADISON—
WRITINGS 733, 736 (Jack N. Rakove ed., 1999) (emphasis added).

But the foundation on which early America was first united would become a battlefield.
The Declaration had not professed equality “in color, size, intellect, moral developments, or social
capacity” any more than “the obvious untruth[] that all were then actually enjoying” or could
immediately receive the right to “life, liberty, and the pursuit of happiness.” 2 COLLECTED WORKS,
supra, at 405–06. Neither did the U.S. Constitution immediately do away with slavery;
compromises were made to secure the support of southern delegates. 4 See generally U.S. CONST.
art. I, §§ 2, cl.3 (Three-Fifths Clause), 9, cl.1 (Importation Clause); id. art. IV, § 2, cl.3 (Fugitive
Slave Clause). The tension between the founding principles and slavery grew as the nation
expanded, and the Supreme Court—with its first foray into substantive due process—vitiated
Congress’ effort to quarantine slavery with the Missouri Compromise. See generally Dred Scott v.
Sandford, 60 U.S. 393 (1857). A “want of national spirit” plagued the country and, as Madison

4
Far from enshrining a right to slavery, however, these constitutional compromises provided a means by
which the Declaration’s promise of liberty “might follow as fast as circumstances should permit.” 2 COLLECTED
WORKS, supra, at 405–06 (Lincoln). Even Frederick Douglass eventually observed that the Three-Fifths Clause
practically diminished the southern states’ representative power and created a constitutional incentive for “becoming
a free State.” FREDERICK DOUGLASS, THE AMERICAN CONSTITUTION AND THE SLAVE, Speech in Glasgow, Scotland
(Mar. 26, 1860), in 3 THE FREDERICK DOUGLASS PAPERS, SERIES ONE: SPEECHES, DEBATES, AND INTERVIEWS: 1855–
1863, at 359 (John W. Blassingame et al. eds., 1985). Even more, the Importation Clause—a compromise that required
Congress wait “twenty years” before it “may terminate forever” the “unnatural traffic” that had “so long and so loudly
upbraided the barbarism of modern policy,” FEDERALIST NO. 42, supra, at 262–63 (James Madison) (describing this
“as a great point gained in favor of humanity”)—presaged the immediate prohibition of the American slave trade in
1808. See generally Act Prohibiting Importation of Slaves, ch. 22, 2 Stat. 426 (1807) (outlawing slavery once the
twenty-year window closed).
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had forecast, the young nation was torn apart by the South’s fixation on “their peculiar interests
and institutions in preference to those which they had in common with the rest of the American
people.” S. Exec. Doc. No. 2, 39th Cong., 1st Sess. (1865). Ultimately, it would take civil war to
sharpen the reality that the Constitution was made “for the [Declaration’s] apple—not the apple
for [its] picture.” 4 Collected Works, supra, at 168–69.

B. Reconstruction efforts

The Reconstruction Era was marked by the federal government’s color-blind effort to
secure equality in the aftermath of war. To start, the Thirteenth Amendment commanded that
“[n]either slavery nor involuntary servitude[] . . . shall exist within the United States.” U.S. CONST.
amend. XIII, § 1. This served not only to emancipate slaves then existing but, to the same extent,
“forb[ade] any other kind of slavery . . . [even if] the party interested may not be of African
descent.” Slaughter-House Cases, 83 U.S. (16 Wall.) 36, 72 (1872). Congress also established the
Freedman’s Bureau—an entity charged with serving “refugees and freedmen” alike. Act of Mar. 3,
1865, ch. 90, 13 Stat. 507–09; accord Act of July 16, 1866, ch. 200, 14 Stat. 173–77. As Congress
had been warned by President Johnson, “the future peace and harmony of the Union” required that
the South “not [be] permitted to build up another ‘peculiar institution’ whose spirit is in conflict
with the fundamental principles of [the nation’s] political system.” S. Exec. Doc. No. 2, 39th
Cong., 1st Sess. (1865). The foundation of that political system, of course, recognized the inherent
station of all mankind—equal in rights.

Former confederate states nonetheless passed defiant legislation, better known as “Black
Codes,” that aimed to limit the newfound freedom of black Americans. See generally 1 WALTER
L. FLEMING, DOCUMENTARY HISTORY OF RECONSTRUCTION 273–311 (1906) (excerpting laws in
Alabama, Arkansas, Florida, Louisiana, Mississippi, North Carolina, and Tennessee). These laws
made use of the Thirteenth Amendment’s exception for conviction-based servitude, U.S. CONST.
amend. XIII, § 1, and preserved “slave trade under the guise of vagrancy and apprenticeship laws,”
W.E.B. DU BOIS, BLACK RECONSTRUCTION IN AMERICA 167 (1935). Mississippi, for example,
outlawed blacks from being “found . . . with no lawful employment or . . . unlawfully assembling
. . . together either in the day or nighttime” and also provided that “all white persons so assembling
. . . or usually associating with freedmen[] . . . shall [also] be deemed vagrants.”
MISSISSIPPI VAGRANCY LAW, 1865 MISS. LAWS §§ 2, 5 (imposing race-based tiers of punishment
and mandating that convicted freedmen be “hire[d] out . . . to any person who will, for the shortest
period of service, pay said fine”), reprinted in 1 DOCUMENTARY HISTORY OF RECONSTRUCTION,
supra, 284–85. Further, states disarmed “freedmen” by outlawing the possession of “fire-arms of
any kind” and similarly prohibited “any white person” from supplying such weapons. 1
DOCUMENTARY HISTORY OF RECONSTRUCTION, supra, 289–90 (quoting CERTAIN OFFENSES OF
FREEDMEN, 1865 MISS. LAWS §§ 1, 3); see also, e.g., id. 279–80 (quoting similar offenses in
Louisiana); EDWARD MCPHERSON, THE POLITICAL HISTORY OF THE UNITED STATES OF AMERICA
DURING THE PERIOD OF RECONSTRUCTION 33, 40 (1871) (quoting similar offenses in Alabama and
Florida, respectively). Suffice it to say these laws were “consciously conceived methods of
resurrecting the incidents of slavery,” Gen. Bldg. Contractors Ass’n v. Pennsylvania, 458 U.S.
375, 386–87 (1982), and “curtailed . . . the pursuit of life, liberty, and property to such an extent
that . . . freedom was of little value” in the South, Slaughter-House Cases, 83 U.S. (16 Wal.) at 70.
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See generally Cong. Globe, 39th Cong., 1st Sess. 399, 1124, 1151–1152, 1159, 1785, 1839 (1866)
(Reps. Cook, Thayer, Windom, Stewart, and Clarke).

Congress responded with statutory and constitutional force. First came the Civil Rights Act
of 1866, which aimed “to carry into effect the [Thirteenth] amendment.” CONG. GLOBE, 39th
Cong., 1st Sess. 474 (1866) (Senator Trumbull). The Act confirmed “[t]hat all persons born in the
United States and not subject to any foreign power[] . . . are . . . citizens . . . and such citizens, of
every race and color,” possessed the “same right[s]” in various fora—e.g., the right to make and
enforce contracts, acquire and dispose of property, as well as testify in court. Civil Rights Act of
1866, ch. 31, § 1, 14 Stat. 27 (1866) (emphases added); see also, e.g., McDonald v. Santa Fe Trail
Transp. Co., 427 U.S. 273, 286–87 (1976) (explaining that “the language and history of [§] 1981”
reveals it “is applicable to racial discrimination in private employment against white persons” just
as it is against “nonwhites”). By “extending the right of citizenship and equality before the law to
persons of every race and color,” Justice Bradley observed while riding circuit, Congress refuted
the insidious claim “that none but the white race were entitled to the rights of citizenship in this
country.” United States v. Cruikshank, 25 F. Cas. 707, 711 (C.C.D. La. 1874) (Bradley, J.), aff’d,
92 U.S. 542 (1875); accord CONG. GLOBE, 39th Cong., 1st Sess. 399, 474 (1866) (Senator
Trumbull) (professing “to secure equal rights to all the citizens” and thereby vindicate the
Thirteenth Amendment’s “declar[ation] that all persons in the United States should be free”
(emphasis added)). Other justices on circuit likewise recognized that, without the Act, the “simple
abolition” of slavery “would have been a phantom of delusion.” United States v. Rhodes, 27 F.
Cas. 785, 794 (C.C.D. Ky. 1866) (Swayne, J.); see also, e.g., In re Turner, 24 F. Cas. 337 (C.C.D.
Md. 1867) (Chase, C.J.) (holding an apprenticeship contract violated the Act’s equal protection
clause).

That same year gave birth to the Fourteenth Amendment. Beyond eliminating any question
as to whether the 1866 Civil Rights Act reached beyond the Legislature’s station—as well as
eliminating any remaining taint of Dred Scott—the Amendment “facilitated the enforcement of
rules that had already existed but . . . could not have [been federally] enforced on their own.”
William Baude et al., General Law and the Fourteenth Amendment, 76 STAN. L. REV. 1185, 1208–
10 (2024) (emphasis added) (describing how “[i]t facilitated the federal enforcement of basic rights
without nationalizing the rights themselves”); see also, e.g., ROBERT J. KACZOROWSKI, THE
POLITICS OF JUDICIAL INTERPRETATION: THE FEDERAL COURTS, DEPARTMENT OF JUSTICE, AND
CIVIL RIGHTS, 1866-1876 (2005) (highlighting the importance of federal enforcement during
Reconstruction). Chief among its terms was an unmistakable command: “No state shall make or
enforce any law . . . abridg[ing] the privileges or immunities of citizens of the United States;”
“deprive any person of life, liberty, or property[] without due process of law; nor deny to any
person within its jurisdiction the equal protection of the laws.” U.S. CONST. amend. XIV, § 1
(emphasis added). In doing so, the Constitution guaranteed “equal protection and security should
be given to all under like circumstances in the enjoyment of their personal and civil rights.” Barbier
v. Connolly, 113 U.S. 27, 31 (1884).
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Congress next championed the 1875 Civil Rights Act. Though ultimately held
unconstitutional by the Supreme Court, 5 The Civil Rights Cases, 109 U.S. at 24–25, the 1875 Act
provided unique insight into the scope of the Fourteenth Amendment: Both “[s]upporters and
opponents of the [1875 Act] alike agreed that the Fourteenth Amendment had no bearing on ‘social
rights,’” given the “universally accepted . . . but [now] forgotten . . . [distinction] between civil
rights, political rights, and social rights.” Michael W. McConnell, Originalism and the
Desegregation Decisions, 81 VA. L. REV. 947, 1016 (1995). “To the Republicans of the
Reconstruction period,” of course, “equality of civil rights was not necessarily linked to equality
in general” or “social equality” but rather the “realization of an ideal of . . . citizens who were
equal in their rights before the law, however unequal they might be in other respects.” Id.
(emphasis added).

C. The Jim Crow era

The Supreme Court nonetheless ushered a new era of de jure segregation by endorsing the
social and constitutional myth of “separate but equal” in Plessy v. Ferguson, 163 U.S. 537 (1896).
Abandoning the text and spirit of the Fourteenth Amendment, the Court upheld a Louisiana statute
that consecrated “separate railway carriages for the white and colored races.” Id. at 540–42. In
addition to rejecting a challenge brought under the Thirteenth Amendment, the Court upheld the
statute under the Fourteenth Amendment’s Equal Protection Clause because, according to the
Court, the amendment “could not have been intended to abolish distinctions based upon color, or
to enforce social, as distinguished from political, equality, or a commingling of the two races upon
terms unsatisfactory to either.” Id. at 544. But as Justice Harlan correctly explained in his forceful
dissent, there can be no claim that the Constitution leaves room for a “superior, dominant, ruling
class of citizens.” Id. at 559 (Harlan, J., dissenting). “Our constitution is color-blind,” he continued,
and that charter “neither knows nor tolerates classes among citizens.” Id. (Harlan, J., dissenting).
Put simply, “[t]he law regards man as man, and takes no account of his surroundings or of his color
when his civil rights as guaranteed by the supreme law of the land are involved.” Id. (Harlan, J.,
dissenting).

Over a half-century would pass before the Court would come to vindicate Justice Harlan’s
position with Brown v. Board of Education, 347 U.S. 483, 491 (1954). The Court embraced
appellants’ constitutional reliance on the equality principle—arguing that any “racial criterion is a
constitutional irrelevance,” Brief for Appellants at 7, Brown v. Bd. of Educ., 347 U.S. 483 (1954)
(No. 1)—and held that “the doctrine of ‘separate but equal’ has no place” in public education.
Brown, 347 U.S. at 495. “To separate [black students] from others of similar age and qualifications
solely because of their race,” the Court explained, “generates a feeling of inferiority as to their

5
Ironically, the Supreme Court invalidated the 1875 Act because “[i]t applie[d] equally to cases arising in
States which have the justest laws respecting the personal rights of citizens, and whose authorities [were] ever ready
to enforce such laws, as to those which arise in States that may have violated the prohibition of the [Fourteenth]
amendment.” The Civil Rights Cases, 109 U.S. 3, 14 (1883). There was no question of Congress’s “full power to
afford a remedy under [the Fourteenth] amendment” where “the laws themselves make any unjust discrimination,”
but the Court held the federal government had no power to interfere in the local domain “without referring in any
manner to any supposed action of the state or its authorities.” Id. at 23–25.
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status in the community that may affect their hearts and minds in a way unlikely ever to be
undone.” Id. at 494. Regardless of whether the facilities were of equal quality, segregating races
in separate facilities was “inherently unequal.” Id. at 495. Brown therefore proved pivotal in
recognizing the constitutional promise of equal protection.

D. The Civil Rights Act of 1964

Still, black Americans faced segregated spaces in public accommodations, interstate and
intrastate transportation, restaurants, theaters, hotels, public parks, and swimming pools. The Civil
Rights Movement, under the leadership of Dr. Martin Luther King, Jr., thus sought to dismantle
this system of de jure and de facto segregation. And the movement would achieve incredible
success, in part because Dr. King was committed to the goal of a color-blind society in which race
would become legally irrelevant. Drawing upon “the magnificent words of the Constitution and
Declaration of Independence,” which Dr. King described as “a promissory note to which every
American was to fall heir,” he publicly championed “a dream” of a nation where his children
would “not be judged by the color of their skin but by the content of their character.” Martin Luther
King, Jr., I Have a Dream (Aug. 28, 1963), in I HAVE A DREAM: WRITINGS AND SPEECHES THAT
CHANGED THE WORLD 102–04 (James M. Washington ed., 1992). Just as the founding statesmen
before him, see supra pp. 2–3, Dr. King fought for “a society in which all men are equal, not in
the sense that they have the same talents, but in the sense that they have an equal opportunity to
develop whatever talents they have.” Martin Luther King, Jr., Commencement Address at
Wesleyan University (June 7, 1964), in THE PAPERS OF MARTIN LUTHER KING, JR., VOLUME VII:
TO SAVE THE SOUL OF AMERICA 408, 410 (Clayborne Carson et al. eds., 2014).

Dr. King’s embrace of a color-blind society was likewise reflected in the landmark
legislation of the Civil Rights Movement: The Civil Rights Act of 1964. Broken into titles that
address public accommodations, public facilities, public education, federally assisted programs,
and equal employment opportunities, 42 U.S.C. §§ 2000a–2000a-6 (“Public Accommodations”),
2000b–2000b-3 (“Public Facilities”), 2000c–2000c-9 (“Public Education”), 2000d–2000d-
7(“Federally Assisted Programs”), 2000e–2000e-17 (“Equal Employment Opportunities”), the Act
erected a federal civil rights regime to serve as a bulwark against unfair exclusion or discrimination
by virtue of any person’s race or protected characteristic. See, e.g., id. §§ 2000a(a) (“All persons
shall be entitled to the full and equal enjoyment of the goods, services, facilities, privileges,
advantages, and accommodations of any place of public accommodation . . . without
discrimination or segregation on the ground of race, color, religion, or national origin.” (emphases
added)), 2000e-2(a)(1) (“It shall be an unlawful employment practice for an employer[] . . . to fail
or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual
with respect to his compensation, terms, conditions, or privileges of employment, because of such
individual’s race, color, religion, sex, or national origin[] . . . .” (emphases added)).

The principal architects of the Act made clear that it provided for absolute, unflinching
equality under the law—not preferential treatment for certain races. During a debate regarding
Title VII, for example, Senator Hubert Humphrey offered to “start eating the pages one after
another” if his senate colleague could “find . . . any language which provides that an employer will
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have to hire on the basis of percentage or quota related to color, race, religion, or national origin.”
110 Cong. Rec. 7420 (1964) (statement of Sen. Humphrey); accord 110 Cong. Rec. 7247 (1964)
(memorandum of Sens. Clark & Case) (explaining that Title VII “expressly protects the
employer’s right to insist that any prospective applicant[] . . . meet the applicable job qualifications
. . . [and] does not provide that any preferential treatment in employment shall be given to Negroes
or to any other persons or groups”). Indeed, the bipartisan congressional leadership that enacted
the Civil Rights Act of 1964 understood that the Act did precisely what it said: mandating equal
treatment without regard to race, not equality of condition or result, wrought from racial quotas or
preferential treatment for the chosen few. ANDREW KULL, THE COLOR-BLIND CONSTITUTION 180–
86 (1992). Suffice it to say that Congress forbid “[d]iscriminatory preference for any group,
minority or majority,” and thereby mandated “the removal of artificial, arbitrary, and unnecessary
barriers . . . [that] operate invidiously to discriminate on the basis of racial or other impermissible
classification.” Griggs v. Duke Power Co., 401 U.S. 424, 431 (1971) (commenting on Title VII).

E. Texas’ independent pursuit of equality

Texas also made its own contributions to the national pursuit of genuine equality. In 1972,
Texans “adopted [the Equal Rights Amendment] by a four to one margin.” In re McLean, 725
S.W.2d 696, 696–98 (Tex. 1987). This constitutional provision, better known as the “ERA,” makes
clear “that ‘[e]quality under the law shall not be denied or abridged because of sex, race, color,
creed, or national origin.’” Bell v. Low Income Women of Tex., 95 S.W.3d 253, 257 (Tex. 2002)
(quoting TEX. CONST. art. I, § 3a). Far from a constitutional “exercise in futility,” the ERA
memorialized a “more extensive and . . . more specific protection” than that found in our national
charter. McLean, 725 S.W.2d at 697; accord Bell, 95 S.W.3d at 262 (highlighting that sex is
“elevat[ed] . . . to a suspect class” and therein “subject[ed] . . . to heightened strict-scrutiny
review”). Thus “[e]ven the loftiest goal does not justify . . . discrimination” in Texas, and all forms
of this pernicious enterprise receive equal treatment: They are invalid unless “no other manner”
can protect a “compelling interest.” Id. at 697–98. Even more, the ERA also catalyzed several
legislative efforts to remove sex-based discrimination as it related to property and labor rights.
Sherilyn Brandenstein, The Texas Equal Rights Amendment: A Historical Overview, TEX. STATE
HIST. ASS’N (Feb. 1, 1996).

The next load-bearing pillar of Texas’s effort took shape with the Texas Commission on
Human Rights Act (“TCHRA”) of 1983. See Brooks William Conover, III, Jurisdictional and
Procedural Issues Under the Texas Commission on Human Rights Act, 47 BAYLOR L. REV. 683,
686 (1995) (explaining the TCHRA’s history and development). Among the TCHRA’s “general
purposes” is “the execution of . . . Title VII[’s policies] and . . . subsequent amendments.” TEX.
LAB. CODE § 21.001(1); accord, e.g., Prairie View A&M Univ. v. Chatha, 381 S.W.3d 500, 504
(Tex. 2012) (“The TCHRA was ‘enacted to address the specific evil of discrimination and
retaliation in the workplace,’ as well as to coordinate and conform with federal anti-discrimination
and retaliation laws under Title VII.” (quoting City of Waco v. Lopez, 259 S.W.3d 147, 153–55
(Tex. 2008))). But the TCHRA and Title VII are not identical in all respects. While the TCHRA
was “patterned after Title VII,” Texas law reaches farther than its federal counterpart and imposes
liability where any protected characteristic—including “age and disability,” which Title VII does
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not protect—served as a “motivating factor” for an unlawful employment practice. Quantum
Chem. Corp. v. Toennies, 47 S.W.3d 473, 476–80 (Tex. 2001) (adhering to the Labor Code’s “plain
meaning” over federal precedent on Title VII).

F. Backslide into demographic-based preferences and carveouts

Unfortunately, this progress would soon be overtaken by a nationwide embrace of policies
that treated certain forms of racism as “politically acceptable.” Metro Broad., Inc. v. FCC, 497
U.S. 547, 610 (1990) (O’Connor, J., dissenting).

1. Federal contracts and “affirmative action”

In the Fall of 1965, President Lyndon B. Johnson issued Executive Order 11246—one of
the earliest steps in the proliferation of federal affirmative action policies and programs. See
generally Exec. Order No. 11246, 30 Fed. Reg. 12319 (Sept. 24, 1965), revoked by Exec. Order
No. 14173, 90 Fed. Reg. 8633 (Jan. 21, 2025); see also Exec. Order No. 11375, 32 Fed. Reg.
14303 (Oct. 13, 1967) (expanding affirmative action to include sex as a protected category). This
executive order not only mandated that federal contractors and subcontractors refrain from
discriminating based on race, color, religion, or national origin but also required these entities take
“affirmative action” to ensure equal employment opportunities for minorities. Exec. Order
No. 11246, 30 Fed. Reg. at 12320. This directive, enforced by the Department of Labor, compelled
contractors to develop written affirmative action plans with goals and timetables related to hiring
and promoting certain groups over others. Id. at 12320, 12325; see also 41 C.F.R. §§ 60-1.40, 60-
2.1–.36. While the order directly bound only federal contractors, its ripple effects caused state
agencies and universities engaged in federal contracting to align their own procurement and
employment practices with the new federal standards—fearing forfeiture of lucrative contracts tied
to national defense, infrastructure, and research initiatives.

President Nixon inherited and expanded upon his predecessor’s framework and used
express racial quotas as a means of consecrating tangible benchmarks. Northern trade unions had
been a major obstacle in achieving Johnson’s goals for representative employment in federal
contracting, as the unions had long excluded black workers from skilled construction jobs through
closed-shop practices and apprenticeship barriers. See James A. Hardgrove, Philadelphia Plan,
45 NOTRE DAME L. REV. 678, 679 (1970) (discussing the exclusionary practices of northern trade
unions). Those exclusionary practices meant that federal contractors could not comply with
Johnson’s Executive Order 11246 unless the union bottleneck was addressed and, in turn, the
Nixon Administration imposed its own affirmative action plans. See id. The most notable example
was the Philadelphia Plan of 1969, which required contractors in six major trades in the
Philadelphia Area to meet specific, numeric benchmarks for minority participation in federal
contracting. See id. at 682–83. Nixon’s Labor Department reframed the issue as one of economic
efficiency: With federal spending on infrastructure surging, the government could not afford an
artificially restricted labor supply. See Contractors Ass’n of E. Pa. v. Sec’y of Lab., 442 F.2d 159,
171 (3d Cir. 1971); see also Hardgrove, supra, at 696 n. 115. When challenged, the Third Circuit
upheld the policy. See Contractors Ass’n, 442 F.2d at 174. The Philadelphia Plan thus marked the
first large-scale use of numerical diversity targets in federal contracting and created “[a]ffirmative
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action as we know it today[,] [defined as] ‘any measure[] . . . beyond simple termination of a
discriminatory practice, adopted to correct or compensate for past or present discrimination or to
prevent discrimination from recurring in the future.’” Anthony M. Platt, The Rise and Fall of
Affirmative Action, 11 NOTRE DAME J.L. ETHICS & PUB. POL’Y 67, 72 (1997) (quoting U.S.
Comm’n on Civil Rights, Statement of Affirmative Action 2 (1977)).

In the 1970s, the federal commitment to race-conscious policies expanded beyond federal
procurement into business development, most notably through the Small Business
Administration’s Section 8(a) program. That program was rooted in the Small Business Act of
1953, which authorized the SBA to enter into contracts with federal agencies and subcontract to
small businesses. See Pub. L. No. 83-163, 67 Stat. 230, 232 (1953) (codified as amended at 15
U.S.C. §§ 631 et seq.). However, a decisive turn occurred in 1970, as the program was reoriented
to assist small businesses “owned by disadvantaged persons” so that these enterprises might
“become self-sufficient, viable businesses capable of competing effectively in the market place.”
13 C.F.R. § 124.8-1(b) (1970). Three years later, a definition of “disadvantaged persons” was
adopted that specifically included “black Americans, Spanish-Americans, oriental Americans,
Eskimos, and Aleuts,” accompanied by a rebuttable presumption that such individuals were indeed
“disadvantaged.” 13 C.F.R. § 124.8(c) (1973). Notably, this entire initiative operated in a statutory
vacuum until 1978, when Congress ratified the program to continue benefitting “disadvantaged”
firms in federal procurement. Pub. L. No. 95-507, 92 Stat. 1757 (1978) (codified at 15 U.S.C.
§ 637). In so doing, Congress defined “socially disadvantaged individuals” to include those
“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. at 1762 (codified at 15 U.S.C. § 637(a)),
and set forth mandatory contractual language requiring contractors to “presume that socially and
economically disadvantaged individuals include Black Americans, Hispanic Americans, Native
Americans, and other minorities,” id. at 1767 (codified at 15 U.S.C. § 637(d)). States then began
to mirror these efforts in their own procurement processes. See, e.g., MISS. CODE § 57-75-21;
N.C. GEN. STAT. § 143-128.2. This harmonization effectively tied state policies to federal race-
conscious frameworks, as non-compliance could disadvantage states in broader economic
competition.

The federal government next extended race-conscious policies into infrastructure with the
Department of Transportation’s Disadvantaged Business Enterprise (DBE) program. Established
in 1983 through the Surface Transportation Assistance Act, the DBE program adopted by reference
Section 8(a)’s definition of “socially and economically disadvantaged individuals.” Pub. L. No.
97-424, § 105(f), 96 Stat. 2097, 2100 (1983) (codified at 49 U.S.C. § 47113(a)(2)). The program
required that recipients of Department of Transportation funds—primarily states, localities, and
transit authorities—ensure at least ten percent of federal highway and transit dollars go to small
businesses owned by socially and economically disadvantaged individuals. 49 U.S.C. § 47113(b).
The program also imported Section 8(a)’s racial presumptions, with regulations providing that
“Black Americans,” “Hispanic Americans,” “Native Americans,” “Asian-Pacific Americans,” and
“Subcontinent Asian Americans” are “rebuttably presumed to be socially and economically
disadvantaged.” 49 C.F.R. § 26.5. Even more, this DBE program required that those receiving
funding take “race-conscious measures” when race-neutral alternatives are deemed insufficient.
Id. §§ 26.5, .45, .47, .51. Recipients that failed to achieve DBE participation goals would bear the
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burden of conducting analyses of those shortfalls, on pain of suspension or termination of federal
funding. Id. §§ 26.47, .101. This regime therefore coupled continued access to billions in
transportation aid with state adoption of race-conscious programs—prompting nearly every state
to create DBE offices and integrate racial considerations into bidding processes. Put simply, the
program cemented federal affirmative action policies into subnational governance and
fundamentally reshaped states’ approach to public works.

2. Supreme Court

Even the U.S. Supreme Court endorsed the constitutionally pernicious notion of racial
carveouts for a season. In Fullilove v. Klutznick, 448 U.S. 448 (1980), for example, the Court
confronted whether Congress could lawfully set aside no less than ten percent of federal public-
works for minority-owned businesses under Public Works Employment Act of 1977. Id. at 453.
Chief Justice Burger’s narrow plurality opinion reasoned that Congress could remedy the effects
of past discrimination given its remedial power under section 5 of the Fourteenth Amendment and
broad spending power. See id. at 472–78, 480–82 (noting that the program was a “strictly remedial
measure” and outlining the conditions that prevented a pure racial quota). Justice Powell concurred
separately, stressing that Congress had developed an adequate factual record and that the program
was flexible and temporary. See id. at 495–517 (Powell, J., concurring); see also id. at 516 (“[T]he
use of racial classifications, which are fundamentally at odds with the ideals of a democratic
society implicit in the Due Process and Equal Protection Clauses, cannot be imposed simply to
serve transient social or political goals, however worthy they may be.”). Though no single opinion
commanded a majority, let alone more than three votes, Fullilove broadly stood for the proposition
that Congress could use racial preferences to remedy historic discrimination in federal spending.

A narrow majority in Regents of University of California v. Bakke, 438 U.S. 265, 272–276
(1978) (plurality op.) also upheld the consideration of race within the context of higher education.
The case arose from the U.C. Davis Medical School’s admissions program, which gave priority to
minority applicants through a separate admissions track. Id. at 269–70. Allan Bakke, a white man,
was denied admission while minority applicants with lower grade point averages and standardized
test scores were admitted through the special admissions program. Id. at 276–77. Bakke responded
by challenging the university’s race-based preferences under the Title VI as well as the California
and U.S. Constitutions. Id. at 277–78. Though the California Supreme Court concluded the
admissions program was unlawful and ordered Bakke to be admitted, id. at 280–81, the U.S.
Supreme Court reversed and partially upheld the admissions program to the extent “the State has
a substantial interest that legitimately may be served by . . . involving the competitive
consideration of race and ethnic origin.” Id. at 320 (opinion of Powell, J.).

The case nonetheless fractured the Court. Four justices believed Bakke’s exclusion was
unlawful under Title VI because “[r]ace cannot be the basis of excluding anyone from participation
in a federally funded program,” id. at 418–21 (joint opinion of Stevens, Stewart, Rehnquist, JJ.,
Burger, C.J., concurring in judgment in part and dissenting in part), and this contingent declined
to address the issue under the Equal Protection Clause on grounds of constitutional avoidance. id.
at 411–12 (joint opinion of Stevens, Stewart, Rehnquist, JJ., Burger, C.J. concurring in judgment
in part and dissenting in part). Another four justices believed the admissions program was lawful
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and concluded that U.C Davis could use race for the purpose of “remedying the effects of past
societal discrimination.” Id. at 362 (joint opinion of Brennan, White, Marshall, and Blackmun, JJ.,
concurring in judgment in part and dissenting in part). But it was Justice Powell who ultimately
provided the decisive fifth vote and controlling opinion, announcing the Court’s judgment. He
accepted only one of the rationales offered by U.C. Davis in support of its affirmative action
program—a First Amendment right “to make its own judgments as to education” in pursuit of “a
diverse student body,” id. at 312—and concluded that “race or ethnic background” as “a ‘plus’ in
a particular applicant’s file” was “flexible enough to consider all pertinent elements of diversity in
light of the particular qualifications of each applicant.” 6 Id. at 317.

Bakke’s limited endorsement of a “diversity” interest reared its head twenty-five years later
in Grutter v. Bollinger, 539 U.S. 309 (2003), which upheld yet another university’s race-conscious
admissions program. The Court “endorse[d] Justice Powell’s view that student body diversity is a
compelling state interest that can justify the use of race in university admissions.” Id. at 325. With
that came an examination of the professed diversity rational and its associated “benefits.” See id.
at 327–33. The Court explained that “[t]hese benefits are not theoretical but real” given that “major
American businesses have made clear that the skills needed in today’s increasingly global
marketplace can only be developed through exposure to widely diverse people, cultures, ideas, and
viewpoints.” Id. at 330. So the Court deferred to the university’s “educational judgment that such
diversity is essential to its educational mission.” Id. at 328. Just as Justice Powell had done twenty-
five years earlier, the Court rooted its deference in the university’s First Amendment claim to
academic freedom and concluded the pursuit of a “critical mass” was flexible enough to avoid
constitutional criticism as an impermissible quota. 7 Id. at 328–29, 335–38. But this constitutional
volley came with a chronological boundary.

The Court emphasized that “race-conscious admissions policies must be limited in time”
precisely because a “core purpose of the Fourteenth Amendment was to do away with all
governmentally imposed discrimination based on race.” Id. at 341–42; see also id. at 343
(highlighting deference to the university’s representation that “it would ‘like nothing better than
to find a race-neutral admissions formula’ and will terminate its race-conscious . . . program as
soon as practicable”). This non-negotiable “termination point” served to “assure[] all citizens that

6
Justice Powell nonetheless made clear that strict scrutiny applied to any racial classification, whether
burdening a majority or minority class, and acknowledged that “[t]he guarantee of equal protection cannot mean one
thing when applied to one individual and something else when applied to a person of another color.” Bakke, 438 U.S.
at 289–90 (adding that “if both are not accorded the same protection, then it is not equal”). “We have never approved
a classification that aids persons perceived as members of relatively victimized groups at the expense of other innocent
individuals in the absence of judicial, legislative, or administrative findings of constitutional or statutory violations,”
he continued, and the notion of prior societal discrimination was itself an “amorphous concept of injury” that could
prove “ageless in . . . reach.” Id. at 307. Likewise, Justice Powell explained that U.C. Davis’s goal of “reducing the
historic deficit of traditionally disfavored minorities in medical schools and in the medical profession” was little more
than “discrimination for its own sake” and thus “facially invalid.” Id. at 306–07.
7
A companion case decided on the same day, however, confronted the outer limit of permissible
consideration of race—holding that another university’s point-based admissions system failed constitutional scrutiny
for want of “individual consideration” and because it “ha[d] the effect of making ‘the factor of race . . . decisive.’”
Gratz v. Bollinger, 539 U.S. 244, 271–72 (2003) (alteration in original) (quoting Bakke, 438 U.S. at 317).
- Page 14

the deviation from the norm of equal treatment of all racial and ethnic groups is a temporary . . .
measure taken in the service of . . . equality itself.” Id. at 342 (citation omitted). Yet a quarter
century had passed “since Justice Powell first approved the use of race . . . in the context of public
higher education,” and, “[s]ince that time, the number of minority applicants with high grades and
test scores ha[d] indeed increased.” Id. at 343. As such, the Court offered an unambiguous forecast:
“We expect that [twenty-five] years from now, the use of racial preferences will no longer be
necessary to further the interest approved today.” Id. (emphasis added).

3. Corporate Diversity Movement

This malignant fixation on “diversity” also spread to the private sector. Corporate diversity
initiatives first arose as institutional reactions to expanding federal mandates and the threat of
litigation—ushering “an era of training” that included “recitations on the law and company
policies.” Rohini Anand & Mary-Frances Winters, A Retrospective View of Corporate Diversity
Training from 1964 to the Present, in 7 ACAD. OF MGMT. LEARNING & EDUC. 356, 357 (2008); see
also, e.g., Lauren B. Edelman, Legal Ambiguity and Symbolic Structures: Organizational
Mediation of Civil Rights Law, in 97 AM. J. OF SOCIO. 1531, 1535, 1545 (1992). Yet the effort
slowly shifted from proactive compliance to the pursuit of financial advantage, Anand & Winters,
supra, at 358–59, presaging the eventual “business case for diversity.” Alison M. Konrad,
Leveraging Workplace Diversity in Organizations, in 3 ORG. MGMT. J. 164, 166 (2006).

The 1980s confronted a “startling revelation” in a publication, commissioned by the
Department of Labor and dubbed Workforce 2000, that found eighty-five percent of net new
entrants to the workforce between 1985 and 2000 would be women and minorities. 8 Anand &
Winters, supra, at 358. See generally WILLIAM B. JOHNSTON & ARNOLD E. PACKER, HUDSON
INST., WORKFORCE 2000: WORK AND WORKERS FOR THE TWENTY-FIRST CENTURY 14, 21–22, 122
(1987). While this “was commonly misinterpreted in the press as intimating that there would be a
total rather than a marginal change in ethnic and gender diversity,” Anand & Winters, supra, at
358 (emphases added), the publication “[n]onetheless” started a conversation about the “future
composition of the workforce” and is even credited with adding “‘workplace diversity’ into the
business lexicon.” Id. Workforce 2000 is thus described as “the first document to argue that
workplace diversity was a topic deserving the attention of business managers, not for moral . . .
8
Fortuitously, academic theories like “Critical Race Theory” also arose during the 1970s and 1980s. See
generally RICHARD DELGADO & JEAN STEFANCIC, CRITICAL RACE THEORY: AN INTRODUCTION 4 (1st ed. 2001).
Originating as an offshoot of Critical Legal Studies—a radical, overtly leftist movement within the academy that
reduced law to little more than an ideological instrument for advancing the interests of the powerful and privileged—
early critical-race theorists sought to remedy the “insufficient attention” that had been paid “to racial domination.”
Kimberle Williams Crenshaw, Race, Reform, and Retrenchment: Transformation and Legitimation in
Antidiscrimination Law, 133 HARV. L. REV. 1331, 1350 (1988). Put simply, this academic franchise deemed white
supremacy as the central principle of American society: insisting that racism is normal and permanent rather than
aberrational, DELGADO & STEFANCIC, supra, at 8–10; that neutral principles of colorblind objectivity and merit serve
as ideological weapons for advancing racial subordination, Crenshaw, supra, at 1346, 1367–81; and that incremental
reform is structurally inadequate, DERRICK A. BELL, JR., AND WE ARE NOT SAVED: THE ELUSIVE QUEST FOR RACIAL
JUSTICE 48–64 (1987). CRT therefore championed “equality as a result” or in outcome—as opposed to the sense of
equality on which the nation was founded, see supra Part I.A—to be measured by wealth, employment, education,
and goods. See Crenshaw, supra, at 1341.
- Page 15

but . . . business reasons, and its conclusions formed the basis of what was to become the business
case for diversity.” Konrad, supra, at 166.

The rhetoric that diversity is essential for “business survival” continued to take form and
brought with it a cottage industry of diversity training programs, networking, and mentoring
programs that fixated on the advancement of women and minorities. Frank Dobbin & Alexandra
Kalev, The Origins and Effects of Corporate Diversity Programs at 40 (June 6, 2013),
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2274946. Eventually, companies began
institutionalizing diversity in and of itself with the creation of the “Chief Diversity Officer,” a role
often responsible for “linking diversity strategy with the company’s overall business strategy” and
a “diversif[ied]” workforce. Anand & Winters, supra, at 368–69; Lucy Buchholz, The Rise and
Impact of Chief Diversity Officers, SUSTAINABILITY MAG. (July 7, 2023), https://sustainability
mag.com/articles/breaking-barriers-the-rise-and-impact-of-chief-diversity-of; see also Sonari
Glinton, The Real History Behind DEI and Workplace Equity in America, FORBES (June 26, 2025),
https://www.forbes.com/sites/sonariglinton/2025/06/26/the-real-history-behind-dei-and-workplac
e-equity-in-america/. “Equity” and “inclusion” joined the list of corporate buzzwords, and
companies developed even more formalized, comprehensive programs, policies, and goals under
the heading of DEI, Glinton, supra—including mandatory training, recruiting, and hiring practices
based at least in part on an individual’s membership in chosen demographics. See, e.g., Matthew
Lavietes, ‘Watershed Moment’: Corporate America Looks to Hire More Black People, REUTERS
(Aug. 19, 2020), https://www.reuters.com/article/us-usa-race-hiring-idUSKCN25F2SY/
(exemplifying that companies have promised a certain percentage of positions would be filled with
individuals of specific demographic groups); Lauren Feiner, Tech Companies Made Big Pledges
to Fight Racism Last Year—Here’s How They’re Doing So Far, CNBC (June 6, 2021),
https://www.cnbc.com/2021/06/06/tech-industry-2020-anti-racism-commitments-progress-check
.html (exemplifying race-based practices in the workplace in the name of committing to diversity
and inclusion efforts); Rachel Minkin, Diversity, Equity and Inclusion in the Workplace, PEW
RSCH. CTR. (May 17, 2023), https://www.pewresearch.org/social-trends/2023/05/17/diversity-
equity-and-inclusion-in-the-workplace/ (referring to DEI initiatives involving hiring, pay,
promotions measures, affinity groups, and trainings). Thus what started as a compliance-focused
initiative by companies had since transformed into a multi-billion dollar industry with virtually
every Fortune 500 company maintaining some variety of internal DEI infrastructure by 2024,
Jonathan Butcher, Restoring Equality in Employment: Sinking the DEI Ship, HERITAGE FOUND.
(Nov. 27, 2024), https://www.heritage.org/progressivism/report/restoring-equality-employment-
sinking-the-dei-ship; Global Diversity & Inclusion (D&I) Strategic Research Report: Market to
Reach $24.4 Billion 2030 (Mar. 1, 2024), https://www.prnewswire.com/news-releases/global-
diversity-and-inclusion-di-strategic-research-report-2024-market-to-reach-24-4-billion-by-2030--
-top-diversity-equity-and-inclusion-trends-for-2023-and-beyond-302077414.html, replacing the
ideal of equal opportunity with a perversely ironic system of exclusion.

The U.S. Supreme Court’s decisions in Bakke and Grutter, see supra Part I.F.2, added fuel
to the trending rhetoric that permissible discrimination can exist in a business setting for the sake
of “diversity.” The Court’s recognition of diversity as a compelling government interest sparked
discourse as to whether such a justification can extend beyond higher education and into the
employment context. See, e.g., Richard N. Appel et al., Affirmative Action in the Workplace Forty
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Years Later, 22 HOFSTRA LAB. & EMP. L. J. 549, 570–74 (2005); Eric A. Tilles, Lessons From
Bakke: The Effect of Grutter on Affirmative Action in Employment, 6 UNIV. PA. J. OF BUS. L. 451,
459–63 (2004); see also, e.g., Petit v. City of Chicago, 352 F.3d 1111, 1112, 1114–15 (7th Cir.
2003) (applying “the Grutter standards” to public employment). Grutter openly relied on amicus
briefs submitted by the American business community to validate the avowedly exclusive link
between diversity and “the skills needed in [an] increasingly global marketplace,” Grutter, 539
U.S. at 330, and was thus widely understood as effectively “endors[ing] the ‘business case for
diversity’ itself,” Cynthia L. Estlund, Putting Grutter to Work: Diversity, Integration, and
Affirmative Action in the Workplace, 26 BERKELEY J. OF EMP. & LAB. L. 1, 20 (2005); see also,
e.g., David B. Wilkins, From “Separate is Inherently Unequal” to “Diversity is Good for
Business”: The Rise of Market-Based Diversity Arguments and the Fate of the Black Corporate
Bar, 117 HARV. L. REV. 1548, 1558 (2004) (explaining Grutter put “strong pressure” on “future
advocates for racial justice in both the court of law and the court of public opinion” to “not only
. . . argue in the language of diversity but also to justify diversity in terms of the efficient
functioning of institutions and the market”). In short, these decisions begged whether the Court
would prove equally receptive to affirmative action as a corporate lodestar that the colorblind text
of the 1964 Civil Rights Act would otherwise prohibit. See, e.g., Rebecca Hanner White,
Affirmative Action in the Workplace: The Significance of Grutter?, 92 KY. L.J. 263, 278 (2003)
(concluding that “Grutter’s impact on the workplace” created “an open question,” including how
it fits within the framework of statutory claims).

The decades following Grutter saw corporations increasingly embrace discriminatory
employment practices under the banner of promoting workplace “diversity and inclusion.” Race-
and sex-based recruitment, hiring, and promotion became standard practice. Nat’l Ass’n of Colls.
& Emps., 2010 Recruiting Benchmarks Report (2010), https://files.eric.ed.gov/fulltext/
ED526916.pdf; see also, e.g., Wei Cai et al., Diversity Targets, 29 REV. ACCT. STUD. 2157, 2157,
2169, 2171–72 (2024); NAT’L ASS’N OF COLLS. & EMPS., 2023 RECRUITING BENCHMARKS REPORT
(2023), https://www.naceweb.org/store/2023/2023-recruiting-benchmarks-report-and-dashboard;
Nat’l Ass’n of Colls. & Emps., 2017 Recruiting Benchmarks Report (2017), https://www.nace
web.org/uploadedFiles/files/2018/about-us/2017-nace-annual-report.pdf; Graduate Mgmt.
Admission Council, Diversity Recruiting: Why It’s Important—for Companies and Schools—and
What Really Works (Nov. 14, 2016), https://www.gmac.com/market-intelligence-and-research/
research-insights/recruitment-and-marketing/diversity-recruiting-why-its-important. A corporate
arms race in virtue signaling also ensued—reaching recent heights of nearly $340 billion in “racial
equity commitments” by Fortune 1000 companies, Earl Fitzhugh et al., It’s Time for a New
Approach to Racial Equity, MCKINSEY & CO. (Dec. 2, 2020), https://www.mckinsey.com/featured
-insights/diversity-and-inclusion/its-time-for-a-new-approach-to-racial-equity, and “nearly all
Fortune 500 companies . . . list[ing] commitments to DEI on their websites” as of 2024, Johnathan
Butcher, Restoring Equality in Employment: Sinking the DEI Ship, HERITAGE FOUND.,
Backgrounder No. 3875 (Nov. 27, 2024). See also, e.g., Atinuke O. Adediran, Disclosing
Corporate Diversity, 109 VA. L. REV. 307, 345–48 (2023).

Concepts drawn from “Critical Race Theory,” see supra n. 8, also found greater purchase
within business discourse and reoriented the discussion of workforce representation around terms
such as “structural racism” and “white privilege.” Mark R. Kramer, The 10 Commitments
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Companies Must Make to Advance Racial Justice, HARV. BUS. REV. (June 4, 2020), https://hbr.org/
2020/06/the-10-commitments-companies-must-make-to-advance-racial-justice; see also, e.g.,
Akwasi Opoku-Dakwa & Darryl B. Rice, A Place for Critical Race Theory and Wokeness in
Diversity Strategies, 38 ACAD. MGMT. PERSP. 214 (2024). Far from mere vernacular, however,
CRT advocates themselves entered the corporate setting under the guise of “DEI consultants” paid
to provide diversity training, implicit-bias workshops, and help shape hiring practices, SOCIAL
JUSTICE VERSUS SOCIAL SCIENCE: WHITE FRAGILITY, IMPLICIT BIAS, AND DIVERSITY TRAINING 2–
4, 55–75 (Craig Frisby & Robert Maranto eds., 2023); see also, e.g., ROBIN DIANGELO, WHITE
FRAGILITY: WHY IT’S SO HARD FOR WHITE PEOPLE TO TALK ABOUT RACISM 22–25 (2018)—
culminating in a $3.8 billion industry that was previously projected to quadruple by 2026. Zak Ali,
With Global Spending Projected to Reach $15.4 Billion by 2026, Diversity, Equity & Inclusion
Takes the Lead Role in the Creation of Stronger Businesses, PR NEWSWIRE (Nov. 3, 2021),
https://www.prnewswire.com/news-releases/with-global-spending-projected-to-reach-15-4-billio
n-by-2026--diversity-equity--inclusion-takes-the-lead-role-in-the-creation-of-stronger-businesses
-301413808.html.

4. Affirmative action invades Texas

Texas, unfortunately, was no stranger to this nationwide movement. Affirmative action in
Texas began in the late 1980s with race conscious legislation in relation to local government
contracting. See, e.g., Act of May 26, 1987, 70th Leg., R.S., ch. 790, § 4, 1987 Tex. Gen. Laws
2774, 2776–77 (codified at TEX. TRANSP. CODE § 451.252) (local transportation authorities); Act
of May 27, 1987, 70th Leg., R.S., ch. 1058, § 1, 1987 Tex. Gen. Laws 3590, 3590 (codified at
TEX. CIV. PRAC. & REM. CODE § 106.001) (large home-rule municipalities); Act of May 4, 1989,
71st Leg., R.S., ch. 124, § 2, 1989 Tex. Gen. Laws 483, 485 (codified at TEX. TRANSP. CODE
§ 22.084) (jointly operated airports); Act of May 29, 1989, 71st Leg., R.S., ch. 1060, § 3, 1989
Tex. Gen. Laws 4305, 4307 (codified as TEX. LOC. GOV’T CODE § 381.004) (community and
economic development plans for counties). Some measures overtly applied to a “minority
business” or “minority business enterprises,” with the term “minority” defined to “include[]
blacks, Hispanics, Asian Americans, American Indians, and Alaska natives.” Act of May 27, 1987,
70th Leg., R.S., ch. 1012, § 4, 1987 Tex. Gen. Laws 3414, 3414–15 (codified at TEX. TRANSP.
CODE § 452.201) (regional transportation authorities); Act of May 27, 1987, 70th Leg., R.S.,
ch. 1058, § 1, 1987 Tex. Gen. Laws 3590, 3590 (codified at TEX. CIV. PRAC. & REM. CODE
§ 106.001); Act of May 28, 1989, 71st Leg., R.S., ch. 734, § 3, 1989 Tex. Gen. Laws 3296, 3297–
98 (codified at TEX. TRANSP. CODE § 451.253) (metropolitan rapid transit authorities); Act of May
29, 1989, 71st Leg., R.S., ch. 1060, § 3, 1989 Tex. Gen. Laws 4305, 4307 (codified at TEX. LOC.
GOV’T CODE § 381.004). Other legislation employed euphemisms such as “disadvantaged
business” while still defining the enterprises in race-oriented terms, requiring ownership by
“socially disadvantaged” persons such as “black Americans, Hispanic Americans, women, Asian
Pacific Americans, and American Indians.” See Act of May 29, 1989, 71st Leg., R.S., ch. 479, § 4,
1989 Tex. Gen. Laws 1650, 1651–52 (codified at TEX. LOC. GOV’T CODE § 351.1035) (contracts
with counties for correctional facilities); Act of Mar. 25, 1991, 72d Leg., R.S., ch. 16, § 13.05(a),
1991 Tex. Gen. Laws 244, 347 (codified at TEX. LOC. GOV’T CODE §§ 375.003, .222) (municipal
management districts). Seeking to avoid the appearance of imposing racial quotas, many of these
measures authorized the relevant governmental entity to establish a “goal” for awarding a certain
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proportion of contracts to businesses associated with certain minority groups or women. Act of
May 27, 1987, 70th Leg., R.S., ch. 1012, § 4, 1987 Tex. Gen. Laws 3414, 3414–15 (codified at
TEX. TRANSP. CODE § 452.201); Act of May 27, 1987, 70th Leg., R.S., ch. 1058, § 1, 1987 Tex.
Gen. Laws 3590, 3590 (codified AT TEX. CIV. PRAC. & REM. CODE § 106.001); Act of May 29,
1989, 71st Leg., R.S., ch. 1060, § 3, 1989 Tex. Gen. Laws 4305, 4307 (codified at TEX. LOC.
GOV’T CODE § 381.004); Act of May 28, 1989, 71st Leg., R.S., ch. 734, § 3, 1989 Tex. Gen. Laws
3296, 3297–98 (codified at TEX. TRANSP. CODE § 451.253); Act of Mar. 25, 1991, 72d Leg., R.S.,
ch. 16, § 13.05(a), 1991 Tex. Gen. Laws 244, 347 (codified at TEX. LOC. GOV’T CODE §§ 375.003,
.222).

This early focus on local contracting soon expanded to statewide legal frameworks,
addressing areas such as agriculture, corrections, and even the administration of the newly created
state lottery. Act of May 26, 1989, 71st Leg., R.S., ch. 230, § 18, 1989 Tex. Gen. Laws 1026,
1032–33 (codified at TEX. AGRIC. CODE § 12.029); Act of Aug. 13, 1991, 72d Leg., 1st C.S., ch.
6, § 2, 1991 Tex. Gen. Laws 197, 203, 206 (codified at TEX. GOV’T CODE §§ 466.107, .151); Act
of Aug. 25, 1991, 72d Leg., 2d C.S., ch. 10, § 19.06, 1991 Tex. Gen. Laws 180, 221 (codified at
TEX. GOV’T CODE § 493.012). Likewise, race conscious measures were not confined to
government contracting with private entities. Race even became a statutorily required factor in the
appointment to certain government positions. See, e.g., Act of May 17, 1991, 72d Leg., R.S.,
ch. 269, § 1, 1991 Tex. Gen. Laws 1178, 1178–79 (codified at TEX. HEALTH & SAFETY CODE
§ 103.002) (stating that “the governor shall attempt to appoint members of different minority
groups including females, African-Americans, Hispanic-Americans, Native Americans, and
Asian-Americans” to the Texas Diabetes Council); Act of May 17, 1991, 72d Leg., R.S., ch. 768,
§ 1, 1991 Tex. Gen. Laws 2735, 2735–37 (codified at TEX. OCC. CODE § 252.001) (same, State
Board of Dental Examiners); Act of Aug. 25, 1991, 72d Leg., 2nd C.S., ch. 8, § 1.03, 1991 Tex.
Gen. Laws 137, 137 (codified at TEX. GOV’T CODE § 2152.052) (same, State Purchasing and
General Services Commission).

The Legislature attempted to soften affirmative racial targets as public criticism of racial
quotas grew. For example, the Legislature began requiring that “good faith efforts” be undertaken
toward predetermined numerical goals. See Act of Aug. 25, 1991, 72d Leg., 2nd C.S., ch. 10,
§ 19.06, 1991 Tex. Gen. Laws 180, 221 (codified at TEX. GOV’T CODE § 493.012) (mandating “a
good faith effort to assist disadvantaged businesses to receive at least [twenty] percent of the total
value of each construction contract”); Act of May 23, 1991, 72d Leg., R.S., ch. 677, § 5, 1991
Tex. Gen. Laws 2457, 2458 (codified at TEX. GOV’T CODE § 2161.181) (mandating “a good faith
effort to assist disadvantaged businesses to receive at least [ten] percent of the total value of all
contract awards”); Act of May 12, 1993, 73d Leg., R.S., ch. 242, § 1.15, 1993 Tex. Gen. Laws
502, 505–06 (codified at TEX. NAT. RES. CODE § 161.131) (mandating “a good faith effort to award
to minority-owned businesses” at least twenty percent of bond-related contracts). The Legislature
also implemented subjective “best value” criteria—infusing race and sex within the government
contracting arena, Act of Mar. 7, 1995, 74th Leg., R.S., ch. 3, § 3, 1995 Tex. Gen. Laws 23, 24–
25 (codified at TEX. EDUC. CODE § 73.115) (requiring the M.D. Anderson Cancer Center to
“consider the impact on the ability of the institution to comply with laws and rules relating to
historically underutilized businesses” in determining the “best value” for acquiring goods and
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services); Act of May 27, 1995, 74th Leg., R.S., ch. 736, § 1, 1995 Tex. Gen. Laws 3846, 3847
(codified at TEX. EDUC. CODE § 51.9335) (medical and dental units of a public institution of higher
education); Act of May 31, 1997, 75th Leg., R.S., ch. 1045, §§ 1–2, 4–5, 1997 Tex. Gen. Laws
3975, 3975–80 (codified at TEX. GOV’T CODE § 2155.144; TEX. HUM. RES. CODE § 32.043; TEX.
HEALTH & SAFETY CODE §§ 12.055, 533.016) (governmental units, public hospitals, and agencies
related to health and human services).

The statutory language of affirmative action continued to evolve, with the concept of a
“historically underutilized business” (i.e., “HUB”) becoming the favored term across various
statutory frameworks. See Act of May 28, 1993, 73d Leg., ch. 684, § 1, 1993 Tex. Gen. Laws
2537, 2537–38 (amending the predecessor to Chapter 2161 of the Government Code from
“disadvantaged business” to “historically underutilized business”); Act of May 31, 1993, 73d Leg.,
R.S., ch. 881, §§ 1–5, 1993 Tex. Gen. Laws 3503, 3502–04 (codified at TEX. GOV’T CODE
§§ 2252.121–.125) (public contracts with HUBs); Act of May 30, 1993, 73d Leg., R.S., ch. 906,
§ 1.06, 1993 Tex. Gen. Laws 3811, 3812–13 (codified at TEX. GOV’T CODE § 2161.063) (requiring
state agencies to prepare a written plan for increasing the use of HUBs); Act of May 28, 1993, 73d
Leg., R.S., ch. 988, § 4.07, 1993 Tex. Gen. Laws 4274, 4300–01 (amending section 493.012 of
the Government Code from “disadvantaged businesses” to “historically underutilized
businesses”). Similarly, grants for parks and recreational areas were newly directed to “recreation,
conservation, or education programs for underserved populations,” with such populations defined
to include “any group of people that is . . . minority . . . or female.” Act of May 14, 1999, 76th
Leg., ch. 267, §§ 1–2, 1999 Tex. Gen. Laws 1130, 1130–31 (codified at TEX. PARKS & WILD.
CODE §§ 24.001, .005).

Despite legal scrutiny, the 2000s saw affirmative action policies expand still further into
new areas such as navigation districts, clean energy projects, and water funds. See Act of May 25,
2003, 78th Leg., R.S., ch. 307, § 1, 2003 Tex. Gen. Laws 1287, 1290 (codified at TEX. WATER
CODE § 60.458); Act of May 29, 2007, 80th Leg., R.S., ch. 1277, § 1, 2007 2003 Tex. Gen. Laws
4261, 4261–62 (codified at TEX. GOV’T CODE § 447.013); Act of May 21, 2013, 83d Leg., R.S.,
ch. 207, § 2.02, 2013 Tex. Gen. Laws 877, 881–83 (codified at TEX. WATER CODE §§ 15.009,
.435). However, those efforts slowed significantly in the last decade—perhaps reflecting legal risks
and public skepticism about the efficacy of these policies. Very little race-conscious legislation
has been enacted since 2015. See generally Act of Mar. 30, 2015, 84th Leg., R.S., ch. 1, § 3.1335,
2015 Tex. Gen. Laws 1, 557–58 (codified at TEX. HEALTH & SAFETY CODE § 533A.016) (allowing
consideration of compliance with laws and rules relating to HUBs as part of “best value”
determination for public expenditures related to intellectual disability services); Act of May 21,
2019, 86th Leg., R.S., ch. 577 (S.B. 300), § 1, 2019 Tex. Gen. Laws 1615, 1615 (codified at TEX.
NAT. RES. CODE § 31.069) (requiring the General Land Office to observe laws and rules relating
to HUBs when awarding indefinite quantity contracts in disaster areas); Act of May 26, 2025, 89th
Leg., R.S., ch. 603, § 1, 2025 Tex. Gen. Laws 1403, 1403–04 (codified at TEX. LAB. CODE
§ 352.060) (allowing consideration of compliance with laws and rules relating to HUBs as part of
“best value” determination for contracts related to provision of vocational rehabilitation services).
- Page 20

G. A return to first principles

Eventually, however, the nation embarked on a return to the first principles on which it was
founded.

1. U.S. Supreme Court

Less than a decade after endorsing racial carveouts within federal government contracting,
see supra pp. 11–13, the Court in City of Richmond v. J.A. Croson Co., 488 U.S. 469 (1989)
(plurality op.), the Court rejected the practice at the state level. The city of Richmond, Virginia
had adopted an ordinance requiring prime contractors on city projects to subcontract at least thirty
percent of construction costs to minority-owned firms. See id. at 477–78. Justice O’Connor’s
plurality opinion reasoned that Fullilove’s lesser scrutiny did not extend to Richmond’s program
because the Fourteenth Amendment grants remedial power to the Federal Government while
restricting state government action based on race. See id. at 490 (explaining “[t]hat Congress may
identify and redress the effects of society-wide discrimination does not mean that, a fortiori, the
States and their political subdivisions are free to decide that such remedies are appropriate”
because “Section 1 of the Fourteenth Amendment is an explicit constraint on state power, and the
States must undertake any remedial efforts in accordance with that provision” (emphasis added)).
Justice O’Connor also emphasized that “a generalized assertion that there has been past
discrimination in an entire industry provides no guidance for a legislative body to determine the
precise scope of the injury it seeks to remedy,” id. at 498, and the City did not provide a “strong
basis in evidence” of its own past discrimination that would justify a race-based remedy, id. at 500.
The plurality therefore rejected Richmond’s claim that “past societal discrimination alone can
serve as the basis for rigid racial preferences.” Id. at 505.

In 1995, the Court closed the loop—overruling Fullilove and extending strict scrutiny to
racial classifications in the context of federal contracting—in Adarand Constructors, Inc. v. Pena,
515 U.S. 200 (1995). There, a Colorado subcontractor challenged a U.S. Department of
Transportation program that gave prime contractors financial incentives to hire “socially and
economically disadvantaged” subcontractors, as determined by “race-based presumptions.” Id. at
204. The Court held that “all racial classifications, imposed by whatever federal, state, or local
governmental actor, must be analyzed by a reviewing court under strict scrutiny.” Id. at 227.
Remanding rather than striking down the program outright, the Court left open the possibility that
a narrowly tailored, evidence-based remedial program could survive review. Id. at 237–39. But the
Court reiterated what it had held repeatedly: the Equal Protection Clause protects all races equally,
and those who have been “disadvantaged by the government because of his or her race, whatever
that race may be,” without doubt “suffer[] an injury.” Id. at 230.

Justice Scalia, who provided the fifth vote, explained that “government can never have a
‘compelling interest’ in discriminating on the basis of race in order to ‘make up’ for past racial
discrimination in the opposite direction.” Id. at 239 (Scalia, J., concurring). While “[i]ndividuals
who have been wronged by unlawful racial discrimination should be made whole[,] . . . under our
Constitution there can be no such thing as either a creditor or a debtor race” because “[t]hat concept
is alien to the Constitution’s focus upon the individual.” Id. (citing U.S. CONST. amend. XIV, § 1).
- Page 21

He went on to explain that “pursu[ing] the concept of racial entitlement—even for the most
admirable and benign of purposes—is to reinforce and preserve for future mischief the way of
thinking that produced race slavery, race privilege and race hatred.” Id. “In the eyes of
government,” he continued, “we are just one race here. It is American.” Id. Justice Scalia thus
concluded “[i]t is unlikely, if not impossible, that the challenged program would survive under this
understanding of strict scrutiny.” Id.

The Court next turned to the public education context in Parents Involved in Community.
School v. Seattle School District No. 1, 551 U.S. 701 (2007), and rejected race-based decision
making in the absence of a valid remedial interest. Two public school districts in Washington and
Kentucky had “relie[d] upon an individual student’s race in assigning [them] . . . to a particular
school” in pursuit of “racial balance . . . within a predetermined range.” Id. at 710. Applying strict
scrutiny, the Court noted that “prior cases, in evaluating the use of racial classifications in the
school context, have recognized two interests that qualify as compelling.” Id. at 720. The first,
“remedying the effects of past intentional discrimination,” did not apply because Seattle had never
segregated schools and Jefferson County had been released from a desegregation decree many
years prior and did not advance a remedial interest. Id. at 720–21. The second, “the interest in
diversity,” was limited to higher education and “was not focused on race alone but encompassed
‘all factors that may contribute to student body diversity.’” Id. at 722 (quoting Bakke, 438 U.S. at
337). “In the present cases, by contrast, race is not considered as part of a broader effort to achieve
‘exposure to widely diverse people, cultures, ideas, and viewpoints,’ race, for some students, is
determinative standing alone.” Id. at 723 (citation omitted). Ultimately, the Court held that
diversity in primary and secondary education does not justify explicit racial classifications—
signaling the Court’s continued return toward a colorblind constitutional baseline, which
recognizes that “[t]he way to stop discrimination on the basis of race is to stop discriminating on
the basis of race.” Id. at 748; see also, e.g., Schuette v. Coalition to Defend Affirmative Action, 572
U.S. 291 (2014) (affirming a state’s right to adopt color-blind policies like banning affirmative
action in public education).

But another sixteen years would pass before the Court fulfilled Grutter’s promise in the
context of higher education and dealt the final constitutional blow to affirmative action in Students
for Fair Admissions, Inc. v. President & Fellows of Harv. Coll., 600 U.S. 181 (2023) (“SFFA”).
Harvard and the University of North Carolina used admissions processes where race sometimes
decided a student’s fate. Id. at 192–97. The programs failed strict scrutiny, serving no compelling
interests and lacking narrow tailoring. Id. at 214–18. The universities’ asserted interests—training
leaders, fostering pluralism, educating through diversity, refining cross-racial understanding, and
others—were of a variety that precluded meaningful judicial review. Id. at 214–15. The programs
also failed narrow tailoring because the universities “fail[ed] to articulate a meaningful connection
between the means they employ and the goals they pursue.” Id. at 215. Their racial categories
proved both overinclusive and underinclusive, again undercutting purported diversity aims. Id. at
216. This “mismatch between the means respondents employ and the goals they seek” further
hindered judicial scrutiny. Id. at 217. The programs further violated the constitutional prohibitions
against using race as a “negative” or as a stereotype. Id. at 218–21. College admissions operate as
“zero-sum,” so advantages for some racial groups inherently disadvantage others. Id. at 218–19.
- Page 22

Race-based admissions thus acted as a “negative” because some racial groups would have gained
more benefits without racial considerations. Id. at 219. Such programs also presumed uniform
thinking by members of the same race, perpetuating stereotypes that subordinate individual merits
to racial ancestry. Id. at 220–21.

SFFA also relied heavily on the “one final limit on race-based admissions programs”
imposed by Grutter: “At some point, the Court held, they must end.” Id. at 212 (citing Grutter,
539 U.S. at 342). Indeed, that “critical” requirement “was the reason the Court was willing to
dispense temporarily with the Constitution’s unambiguous guarantee of equal protection.” Id. That
willingness ended with SFFA, as the lack of a logical end point doomed Harvard and UNC’s race-
based admissions programs. Id. at 221–25. Vague pledges to end the programs once achieving
“meaningful representation and meaningful diversity” without considering race fell short. Id. at
221. Claims that the endpoint would arrive when students could receive the educational benefits
of diversity proved unmeasurable. Id. at 224. Nor would the Court grant a five-year reprieve tied
to Grutter’s expectation that racial preferences would be unnecessary in [twenty-five] years, as
neither university planned to discontinue race-based admissions within that timeframe. Id. Nor
could periodic review of their continued necessity salvage the plans, since “Grutter never
suggested that periodic review could make unconstitutional conduct constitutional.” Id. at 225.
This absence of measurable objectives, inevitable negative use of race, racial stereotyping, and
lack of end points rendered the programs unconstitutional. Id. at 230.

Two years after rejecting race-based admissions in higher education, the Court in Ames v.
Ohio Department of Youth Services, 605 U.S. 303 (2025), extended similar principles to the
employment context under Title VII, rejecting heightened evidentiary burdens on majority-group
plaintiffs alleging discrimination in favor of protected minorities. There, a heterosexual woman
challenged her employer’s denial of a promotion to a management position in favor of a less
experienced lesbian candidate, followed by her demotion in favor of a gay man, both allegedly
motivated by sexual-orientation based favoritism. Id. at 306. The Court held that Title VII imposes
no special requirements on such “reverse discrimination” claims, emphasizing that the statute’s
disparate-treatment provision protects “any individual” from sex-based discrimination and “draws
no distinctions between majority-group plaintiffs and minority-group plaintiffs.” Id. at 309. The
Court thus invalidated the “background circumstances” rule imposed by some circuits, which
“effectively requires majority-group plaintiffs (and only majority-group plaintiffs) to produce
certain types of evidence . . . that would not otherwise be required to make out a prima facie case”
of discriminatory motive. Id. at 311. While that step “is not onerous” for most plaintiffs, “plaintiffs
who are members of a majority group bear an additional burden” under the background
circumstances rule. Id. at 309. But “Congress left no room for courts to impose special
requirements on majority-group plaintiffs alone.” Id. at 310. The background circumstances rule
thus “flouts [the] basic principle” that “the standard for proving disparate treatment under Title
VII does not vary based on whether or not the plaintiff is a member of a majority group.” Id. The
Court therefore held that “Title VII does not impose such a heightened standard on majority-group
plaintiffs,” id. at 313, punctuating its commitment to symmetrical application of antidiscrimination
standards and ensuring consistent protections for all employees, regardless of sex or race.
- Page 23

2. Federal Government

The federal government, too, has made recent progress renewing our national commitment
to equality as opposed to feigned equity. Executive Orders 14151 and 14173, for example, aimed
to swiftly dismantle DEI programs across both the public and private sectors. 9 The former required
termination of DEI “mandates, policies, programs, preferences, and activities in the Federal
Government.” Exec. Order No. 14151, 90 Fed. Reg. 8339, 8339 § 2(a) (Jan. 20, 2025). It also
directed federal agencies to terminate ‘‘‘equity-related’ grants or contracts,” along with “all DEI
. . . performance requirements for employees, contractors, or grantees.” Id. at 8339 § 2(b)(i).
Meanwhile, Executive Order 14173 targeted DEI programs in federal contracting by revoking
Executive Order 11246, Exec. Order No. 14173, 90 Fed. Reg. 8633, 8634 § 3(b)(i) (Jan. 22, 2025),
and requiring federal contractors and subcontractors “to comply with . . . civil-rights laws” and
certify in “every contract” that they “do[] not operate any programs promoting DEI that violate
any applicable Federal anti-discrimination laws,” id. at 8634 § 3(b)(iv)(B). Executive Order 14173
also aimed to deter DEI programs in the private sector by directing federal agencies to, inter alia,
“identify up to nine potential civil compliance investigations of publicly traded corporations” and
other private employers. Id. at 8635 § 4(b)(iii). These executive orders set a clear policy to combat
unlawful DEI initiatives and paved the way for further action by government agencies to advance
this goal.

Recent actions by the U.S. Equal Opportunity Commission and Department of Justice
reflect this shift in policy. The EEOC, for example, issued information requests to twenty major
law firms in March 2025 concerning potentially unlawful DEI recruitment, fellowship, and
advancement programs operating along race or gender lines. Press Release, U.S. EQUAL EMP.
OPPORTUNITY COMM’N, EEOC Acting Chair Andrea Lucas Sends Letters to 20 Law Firms
Requesting Information About DEI-Related Employment Practices (Mar. 17, 2025),
https://www.eeoc.gov/newsroom/eeoc-acting-chair-andrea-lucas-sends-letters-20-law-firms-requ
esting-information-about-dei. While several firms settled with the agency and publicly reaffirmed
their commitment to merit based, nondiscriminatory employment practices, the EEOC’s actions
signal a willingness to aggressively enforce Title VII against unlawful DEI initiatives in the private
sector. Press Release, U.S. EQUAL EMP. OPPORTUNITY COMM’N, In EEOC Settlement, Four ‘Big
Law’ Firms Disavow DEI and Affirm their Commitment to Merit-Based Employment Practices
(Apr. 11, 2025), https://www.eeoc.gov/newsroom/eeoc-settlement-four-biglaw-firms-disavow-
dei-and-affirm-their-commitment-merit-based. The EEOC and DOJ have published guidance
further confirming that “DEI policies, programs, or practices may be unlawful” under Title VII “if
they involve an employer or other covered entity taking an employment action motivated—in
whole or in part—by an employee’s race, sex, or another protected characteristic.” U.S. EQUAL
EMP. OPPORTUNITY COMM’N, WHAT TO DO IF YOU EXPERIENCE DISCRIMINATION RELATED TO

9
Executive Orders 14151 and 14173 are, of course, subject to ongoing litigation. See Nat’l Ass’n of Diversity
Officers in Higher Educ. v. Trump, No. 25-333 (D. Md. filed Feb. 3, 2025); Nat’l Ass’n of Diversity Officers in Higher
Educ. v. Trump, No. 25-1189 (4th Cir. argued Sept. 11, 2025); Nat’l Urb. League v. Trump, No. 1:25-cv-00471
(D.D.C. filed Feb. 19, 2025); Chi. Women in Trades v. Trump, No. 25 C 2005 (N. D. Ill. filed Feb. 26, 2025). Other
than Executive Order 14173’s certification provision—an aspect that is subject to preliminary injunction, Chi. Women
in Trades v. Trump, No. 25 C 2005 (N. D. Ill. Oct. 30, 2025)—both remain in effect.
- Page 24

DEI AT WORK, https://www.eeoc.gov/sites/default/files/2025-03/One_Pagers_2025-
2_%28002%29_508.pdf (last visited Dec. 15, 2025) (emphasis omitted); see also Memorandum
from Pam Bondi, U.S. Att’y Gen., to All Fed. Agencies (July 29, 2025), https://www.justice.gov/
ag/media/1409486/dl (listing unlawful DEI practices).

Other federal agencies have followed suit in their respective spheres. The Office of
Personnel Management, for instance, directed the closure of all government DEI offices and placed
all workers in those offices on leave. Memorandum from Charles Ezell, Acting Dir., U.S. Off. of
Pers. Mgmt., to Heads and Acting Heads of Dep’ts and Agencies (Jan. 21, 2025),
https://www.opm.gov/media/e1zj1p0m/opm-memo-re-initial-guidance-regarding-deia-executive-
orders-1-21-2025-final.pdf. The Department of Education has also acted to eliminate DEI
initiatives, instructing educational institutions that receive federal funding to cease using race “as
a factor in their admissions, hiring, promotion, compensation, scholarships, prizes, administrative
support, sanctions, discipline, and beyond,” or risk investigation and loss of federal funding. 10
Press Release, U.S. DEP’T OF EDUC., U.S. Department of Education Directs Schools to End Racial
Preferences (Feb. 15, 2025), https://www.ed.gov/about/news/press-release/us-department-of-
education-directs-schools-end-racial-preferences. Such agency actions demonstrate the far-
reaching nature of the federal government’s renewed commitment to a long-forgotten truth: “Any
allocation of benefits and burdens based on a person’s race is an anathema to the U.S.
Constitution.” 49 Op. O.L.C. __ (Dec. 2, 2025).

3. Texas

Likewise, Texas has made significant strides toward eliminating all forms of
discrimination. For example, in 2023, the Legislature passed Senate Bill 17, which banned DEI
programing in higher education. The Education Code now defines DEI office to include those
established for the purpose of (1) influencing hiring practices with respect to race, sex, color, or
ethnicity; (2) promoting differential treatment based on these protected characteristics;
(3) promoting policies or procedures with respect to these characteristics; (4) and conducting
training programs and activities implemented in reference to these protected characteristics. TEX.
EDUC. CODE § 51.3525(a). This prevents institutions of higher education from maintaining a DEI
office, hiring anyone to perform the work of DEI offices, compelling or soliciting DEI statements,
giving preference to applicants based on protected characteristics, and requiring students to
participate in DEI training. Id. § 51.3525(b)(1). The statute also prevents institutes of higher
education from spending money appropriated to the institution for a state fiscal year until the
governing board of the institution certifies compliance to the Legislature and the Texas Higher
Education Coordinating Board. Id. § 51.3525(e).

10
To be sure, a district court recently held that the Department of Education’s “Dear Colleague Letter” setting
out its DEI policy was unconstitutional. Am. Fed’n of Tchrs. v. U.S. Dep’t of Educ., 796 F. Supp. 3d 66 (D. Md. 2025).
But an appeal of this decision was recently filed in the United States Court of Appeals for the Fourth Circuit, Am.
Fed’n of Tchrs. v. U.S. Dep’t of Educ., No. 25-2228 (4th Cir. Oct. 15, 2025), and we offer no comment on that ongoing
litigation.
- Page 25

The Governor has also acted to curb racial discrimination through executive order. On
January 31, 2025, Governor Abbott issued Executive Order No. GA-55, directing state agencies
to comply with the “color-blind guarantee of our state and federal Constitutions by prohibiting all
forms of government race discrimination.” Tex. Gov. Exec. Order No. GA-55, 50 Tex. Reg. 810
(Feb. 14, 2025). The executive order explained that the Texas and U.S. Constitutions “require that
state governments always treat people equally regardless of membership in any racial group,
refusing to place a thumb on the scale for or against anyone based on race.” Id. at 1. But “in recent
years, there has been a concerted effort to invert this commitment to equal treatment through
diversity, equity, and inclusion (DEI), critical race theory (CRT), affirmative action, and other
divisive agendas.” Id. The executive order explained that these “blatant efforts to divide people
are just new forms of racism, often weaponized in reverse and rooted in the idea that a person may
be inherently good or bad, the oppressed or the oppressor, based on racial identity.” Id. Moreover,
by “promoting ideas like inherent bias, collective guilt, racial superiority, cultural appropriation,
and other similar notions,” these “racist efforts seek to establish creditor and debtor races,” which
is “inherently antithetical to a society in which ‘all men are created equal.’” Id. The executive order
also explained that “no state agency” may “employ practices or communicate speech rooted in the
unlawful idea that a person is inherently good or bad, blameworthy or innocent, or entitled or
disentitled based on race.” Id. Therefore, the Governor directed “all state agencies to comply with
the color-blind guarantee of both the state and federal Constitutions, including by ensuring that all
agency rules, policies, employment practices, communications, curricula, use of state funds,
awarding of governmental benefits, and all other official actions treat people equally, regardless
of race.” Id. at 2.

This past legislative session, the Legislature again acted to eliminate racial discrimination
in education—this time in kindergarten through twelfth grade. Senate Bill 12 amended the Texas
Education Code by adding Section 11.005. This provision prohibits DEI duties in public schools.
The statute defines those duties to include (1) influencing “hiring or employment practices with
respect to race, sex, color, or ethnicity;” (2) “promoting differential treatment of or providing
special benefits to individuals” on the basis of these protected characteristics (with noted
exceptions); (3) developing policies or procedures that reference these protected characteristics
(with exceptions); and (4) requiring or soliciting a DEI statement or giving preferential treatment
because of such a statement. TEX. EDUC. CODE § 11.005(a). As such, Texas school districts are
forbidden from assigning these duties and must actively prohibit employees, contractors, or
volunteers from engaging in such duties. Id. § 11.005(a). Like Senate Bill 17, Senate Bill 12 aims
to prevent all race-based discrimination, including preferential treatment or benefits tied to race.

Likewise, as of December 2, 2025, the Comptroller announced the removal of women- and
minority-owned businesses from Texas’ HUB program—focusing instead on HUB certification
for businesses owned by disabled veterans. Paul Cobler, Texas Removes Women and Minorities
from Historically Underutilized Business Program for State Contracts, TEX. TRIBUNE (Dec. 2,
2025), https://www.texastribune.org/2025/12/02/texas-historically-underutilized-business-progr
am-hub-women-minorities/. The Comptroller announced that the change was made to restore
“constitutional integrity” to the HUB program and ensure that “Texas’ state contracting is free
from gender or race discrimination.” Id. Still, the statutory race- and sex-preferences memorialized
- Page 26

within the HUB program remain in force and are subject to constitutional challenge. See infra Part
II.A.1 (discussing the HUB program’s constitutional infirmities).

II. DEI in Texas

It is with the foregoing foundation established that we proceed to apply these principles in
Texas. Questions concerning DEI arise in multiple settings, and the law does not treat all alike.
Meaningful analysis therefore requires attention to context—particularly the material distinctions
between DEI in the public and private sectors, which we treat separately in Parts A and B.

A. Public Sector

1. Texas’ HUB programs are unconstitutional

Texas’s HUB framework erects a pervasive, discriminatory regime that violates the U.S.
Constitution’s Equal Protection Clause as well as the Texas Constitution’s Equal Rights
Amendment through indefensible fixation on sex and race. 11 This statutory scheme defines HUB
status (and thus access to lucrative government benefits) by race and sex, rendering the HUB
program presumptively discriminatory and triggering strict scrutiny. See infra Part II.A.1.i. This
scheme mandates “good faith efforts” to meet race- and sex-based targets, which masquerade as
goals but function as de facto quotas that want for any legitimate governmental end. See infra
Part II.A.1.ii. The HUB program also extends these race- and sex-based preferences to
subcontractors, further eroding any notion that these government benefits are coupled with any
claim of the government’s own past direct discrimination. See infra Part II.A.1.iii. Likewise, under
the guise of “best value” procurement, a variety of statutes empower bureaucrats to disregard lower
bids from disfavored bidders while treating race and sex as proxies for competence. See infra
Part II.A.1.iv. Exclusive training, outreach forums, and insider access further benefit HUBs, while
competitors incur penalties for attempting to participate. See infra Part II.A.1.v. At bottom, this
regime lacks any constitutional foundation on which to legitimately distribute burdens and benefits
based on immutable traits like race or sex and requires invalidation—from root to branch. 12

11
We recognize that “race” and “ethnicity” are distinct concepts that respectively relate to “one’s phenotypic
constitution” and “one’s anthropological and cultural identity.” Nuziard v. Minority Bus. Dev. Agency, 721 F. Supp.
3d 431, 479 n.53 (N.D. Tex. 2024). “Both are protected classes the consideration of which merits strict scrutiny.” Id.;
see also, e.g., In re Shaw, 204 S.W.3d 9, 17–18 (Tex. App.—Texarkana 2006, pet. ref’d) (“[L]aws involving
government intrusion which impact persons based on their race or ethnicity are subject to strict scrutiny . . . .”). But,
like the court in Nuziard, we use the term “race” to cover both “simply because precedents use that verbiage more.”
Nuziard, 721 F. Supp. 3d at 479 n.53.
12
This opinion embraces a unified approach to race- and sex-based discrimination under the strict scrutiny
standard that inheres to both the U.S. and Texas Constitutions alike. As detailed earlier, see supra Part I.E, sex-based
classifications are also subject to strict scrutiny under the Texas Constitution—obviating any need to consider such
provisions under the U.S. Constitution’s less stringent intermediate scrutiny standard. Cf., e.g., Richards v. League of
United Latin Am. Citizens, 868 S.W.2d 306, 311 n.3 (Tex. 1993) (recognizing shared scrutiny under both the U.S.
Constitution and Texas’ Equal Rights Amendment). That said, nothing in this opinion should be taken to suggest that
sex-based classifications would survive a less rigorous standard of review.
- Page 27

i. Explicit racial and sex-based classifications render HUB
programs presumptively discriminatory

Chapter 2161 of the Government Code erects a common scaffolding that resides, to varying
degrees, within almost every HUB program in Texas. 13 See generally TEX. GOV’T CODE
§§ 2161.001–.253. Framed simply, the scheme endows a competitive edge to minority- and
women-owned businesses through “preferential treatment” in government contracting and
procurement. See, e.g., Grant v. Pivot Tech. Sols., Ltd., 556 S.W.3d 865, 870–71 (Tex. App.—
Austin 2018, pet. denied); see also, e.g., TEX. GOV’T CODE § 2161.004. This professes to serve
those who have “suffered the effects of discriminatory practices or other similar insidious
circumstances over which the person has no control.” TEX. GOV’T CODE § 2161.001(3)(B).

To this end, the Comptroller of Public Accounts is charged with administering the HUB
program, adopting rules, 14 and requiring associated information from state agencies. Id.
§§ 2161.0012, .002(a). Among the Comptroller’s wide-ranging powers and duties is the obligation
to “certify” as well as “maximize the number of certified” HUBs through agreements with local
governments and nonprofits. Id. § 2161.061(a)–(c); see also id. § 2161.061(d)–(e) (providing that
participating entities must follow Comptroller timelines for certification and maintain searchable
databases of HUB information). Additionally, the Comptroller is commanded to “encourage”
agencies’ use of HUBs by collaborating on “statewide policy for increasing the use of historically
underutilized businesses” and “assisting” these agencies “in seeking historically underutilized
businesses capable of supplying required goods or services,” “identifying and advising historically
underutilized businesses on the types of goods and services the agencies need,” and “increasing
the amount of business placed with historically underutilized businesses.” 15 Id. § 2161.063(a). The
Comptroller is also expected to compile, maintain, and update a HUB directory for state
purchasing and public works awards; biannually distribute that compilation to municipalities; and

13
Other statutes incorporate Chapter 2161 and extend its reach. See, e.g., TEX. GOV’T CODE §§ 791.011(g)
(purchases or purchasing services pursuant to interlocal contracts), 825.514 (Teacher Retirement System),
2054.381(b) (contracting and procurement related to statewide technology centers). Yet more statutes identify
additional entities—like the Texas Economic Development and Tourism Office—who play a key role in HUB
programs through the Small Business Advocate and Office of Small Business Assistance. See id. §§ 481.0067, .0068.
Both entities serve as “the principal focal point in the state” for HUBs, id. §§ 481.0067(c)(1), .0068(b)(2), and identify
financial and regulatory barriers for HUBs as well as funding sources, id. §§ 481.0067(c)(2), .0068(b)(4), (11). These
entities also “perform research, studies, and analyses” on HUB issues. Id. §§ 481.0067(c)(4), .0068(b)(14); see also,
e.g., id. § 481.0068(b)(3), (6)–(8) (detailing OSBA-specific endeavors).
The Comptroller recently adopted emergency rules—effective from December 2, 2025 until April 1, 2026,
14

50 Tex. Reg. 7945, 7953–61 (2025)—substantively altering the regulatory framework for HUBs. See supra Part I.G.3.
But the propriety of these rules is beyond the scope of this opinion, which speaks to the underlying statutory
frameworks that remain in force.
15
The chapter itself bolsters encouragement by requiring that certain, larger state agencies designate a HUB
coordinator to manage training on HUB recruitment and retention, report to the Comptroller, and connect HUBs with
staff. TEX. GOV’T CODE § 2161.062(e). Provisions outside the chapter also authorize agencies to dedicate additional
resources toward HUBs as well. See, e.g., id. § 651.010(b)(1) (authorizing agencies to “hire an entrepreneur-in-
residence or contract with an individual, chamber of commerce, or nonprofit entity” to improve HUB outreach).
- Page 28

provide that information to other local governments on request. 16 Id. § 2161.064. Additionally, the
Comptroller is to create HUB initiatives like the mentor-protégé program and exclusive business
forums. Id. §§ 2161.065–.066.

Chapter 2161 bases HUB status on one of five criteria linked to “economically
disadvantaged persons.” 17 Id. § 2161.001(2). The chapter expressly defines such persons to
include “Black Americans,” “Hispanic Americans,” “women,” “Asian Pacific Americans,” and
“Native Americans.” 18 Id. § 2161.001(3)(A). In turn, to qualify as a HUB, an entity must be either
a corporation majority-owned by economically disadvantaged persons; a sole proprietorship
completely owned and controlled by an economically disadvantaged person; a for-profit
partnership majority owned by economically disadvantaged persons; a joint venture in which each
entity qualifies as a HUB; or a supplier contract in which the HUB manufactures, distributes, or
warehouses and ships supplies and materials. Id. § 2161.001(2)(A)–(E). Were there any doubt,
Chapter 2161 confirms its fixation on race- and sex-based groups by requiring consolidated reports
on contract awards that are themselves categorized “by sex, race, and ethnicity.” Id. § 2161.125.

Other HUB variants follow suit and incorporate some or all of the five HUB definitional
categories. 19 See, e.g., TEX. TRANSP. CODE §§ 284.007(d), 431.109(e) (listing the same five
categories); TEX. GOV’T CODE § 493.012(c)(1) (listing two categories of majority-owned for-profit
businesses); TEX. TRANSP. CODE § 223.041(b) (referencing Section 2161.001); TEX. GOV’T CODE
§§ 2252.121(2), .124 (referencing Section 2161.001 with added requirements). Dispensing with
secondary euphemisms like “economically disadvantaged persons,” these frameworks openly
trace the scope of HUBs with race- and sex-based definitions. See, e.g., TEX. TRANSP. CODE

16
The Comptroller also “maintain[s] a centralized master bidders list” for procurement by state agencies, id.
§§ 2155.261–.270, which state agencies may supplement with their own list of HUBs to increase the number of HUBs
submitting bids to the agency, id. § 2155.268(b). Registration for the master bidders list supports Chapter 2161 through
the collection of registration fees used to prevent fraud in the HUB program. Id. § 2155.266(b).
17
This definition extends beyond Chapter 2161, as other provisions of state law specifically incorporate that
chapter’s HUB definition by reference. See, e.g., id. § 1232.124(2); TEX. HEALTH & SAFETY CODE § 102.259; TEX.
LOC. GOV’T CODE § 335.076(b); TEX. WATER CODE § 15.431(3).
18
Subsection 2161.001(3)(A) additionally includes “veterans as defined by 38 U.S.C. Section 101(2) who
have suffered at least a [twenty] percent service-connected disability as defined by 38 U.S.C. Section 101(16)” as
economically disadvantaged persons. See Act of May 26, 2013, 83d Leg., R.S., ch. 1255, § 1, 2013 Tex. Gen. Laws
3178, 3178–79 (codified at TEX. GOV’T CODE § 2161.001(3)(A)(vi)). Veterans are not a suspect class, so such a
provision is subject to, and easily passes, rational basis review. See generally Pers. Adm’r of Mass. v. Feeney, 442
U.S. 256 (1979). Further, the statute’s explicit inclusion of disabled veterans supersedes a previous attorney general’s
dubious statement that “[b]ecause the term ‘historically underutilized business’ as defined by [the predecessor statute]
is limited to businesses owned by persons identified as members of groups defined by gender, race, or ethnicity, we
must conclude that the commission is not authorized to promulgate a rule to deem businesses owned by individuals
with disabilities as ‘historically underutilized businesses.’” Tex. Att’y Gen. Op. No. DM-328 (1995) at 4.
19
Of note, some provisions incorporate by reference HUB definitions from statutes that have since been
repealed. See, e.g., TEX. GOV’T CODE § 447.013(i) (defining HUBs with reference to “former Section 481.191, as that
section existed on January 1, 2015”); TEX. UTIL. CODE §§ 39.909(a), 52.256(a) (same); see also Act of May 20, 2015,
84th Leg., R.S., ch. 364, § 1(1), 2015 Tex. Gen. Laws 1554, 1554 (repealing Subchapter N of Chapter 481 of the
Government Code, including subsection 481.191(4), which defined HUBs in terms of the first four categories but did
not include a supplier contract).
- Page 29

§§ 284.007(d)(1), 431.109(e)(1) (listing “African Americans, Hispanic Americans, women, Asian
Pacific Americans, and Native Americans”); TEX. GOV’T CODE § 493.012(c)(1) (listing “women,
African Americans, Hispanic Americans, Native Americans, and Asian Americans”).

The problem, of course, is that these “[f]acial classifications engender a presumption of
discriminatory purpose.” Communities for Equity v. Mich. High Sch. Athletic Ass’n, 459 F.3d 676,
694 (6th Cir. 2006)); accord, e.g., SECSYS, LLC v. Vigil, 666 F.3d 678, 685 (10th Cir. 2012). Such
classifications can only rest upon the narrowly tailored pursuit of a compelling, governmental end.
Lewis v. Ascension Par. Sch. Bd., 662 F.3d 343, 348 (5th Cir. 2011); accord Virdi v. DeKalb Cnty.
Sch. Dist., 135 F. App’x 262, 267 (11th Cir. 2005). Good intentions fail this exacting standard for
the simple reason that “[a] racial classification, regardless of purported motivation, is
presumptively invalid and can be upheld only upon an extraordinary justification.” Feeney, 442
U.S. at 272. But virtually every aspect of Texas’ approach to HUBs lacks constitutional
justification and, as discussed below, the “moral imperative of racial neutrality” thus demands
invalidation. See Bartlett v. Strickland, 556 U.S. 1, 21 (2009) (quoting Croson, 488 U.S. at 518
(Kennedy, J., concurring in part and concurring in judgment)).

ii. Requirements for “good faith efforts” to meet HUB
utilization “goals” create a de facto race- and sex-based
quota system that fails strict scrutiny

Chapter 2161 requires that the Comptroller “adopt rules to provide goals for increasing the
contract awards” to HUBs based on the results of the 1994 “State of Texas Disparity Study”
prepared by the National Economic Research Associates. 20 TEX. GOV’T CODE §§ 2161.002(c),
.181–.82. As such, the Comptroller traditionally promulgates “statewide HUB utilization goals.”
See, e.g., 41 Tex. Reg. 8746, 8772 (2016) (proposing former 34 TEX. ADMIN. CODE § 20.284(b));
see also 42 Tex. Reg. 225, 235 (2017) (adopting proposed regulation). The most recent iteration
of those regulatory benchmarks targeted “11.2% for heavy construction other than building
contracts,” “21.1% for all building construction, including general contractors and operative
builders contracts,” “32.9% for all special trade construction contracts,” “23.7% for professional
services contracts,” “26.0% for all other services contracts,” and “21.1% for commodities
contracts.” 50 Tex. Reg. 7935, 7955–56 (2025). With these starting points, agencies are obligated
to develop “strategic plan[s]” that articulate “a policy or mission statement relating to increasing
the use of [HUBs]” as well as “goals” and “specific programs” serving these memorialized ends—
with the Comptroller’s assistance, on request—that are subject to “random periodic monitoring.” 21
TEX. GOV’T CODE § 2161.123; see also id. § 2161.127(b) (explaining these goals and agencies’
compliance therewith are to be submitted in legislative appropriation requests). Other schemes set

20
Those rules are subject to revision “in response to the findings of any updates of the study that are prepared
on behalf of the state.” TEX. GOV’T CODE § 2161.002(c).
21
Other statutes sometimes impose additional consequences for failing to reach statewide HUB utilization
goals. See, e.g., TEX. WATER CODE § 15.009(o) (requiring the Texas Water Fund Advisory Committee to make
recommendations to the Texas Water Development Board for improving HUB participation levels if the “aggregate
level of participation” in certain projects funded by bond enhancement agreements “does not meet statewide annual
goals adopted under Chapter 2161”).
- Page 30

similar goals that are independently linked to other metrics. See, e.g., TEX. TRANSP. CODE
§§ 284.007(b), 431.109(c) (involving federal requirements or goals for “disadvantaged
businesses” under Section 201.702 of the Transportation Code).

Rather than flagrantly branding this as a quota system, of course, HUB frameworks require
“good faith efforts” toward the designated goals. This pertains to both the initial goals articulated
in their strategic plans, TEX. GOV’T CODE § 2161.123(d)(5), as well as their attempts to increase
fiscal-year contract awards to HUBs, id. §§ 2161.181 (contract awards for the purchase of goods
and services), .182(a) (contract awards for construction). 22 Sections 2161.181 and 2161.182
influence other frameworks through direct reference to the Comptroller’s HUB rules. See, e.g., id.
§ 2155.137(b) (subjecting emergency purchases by a state agency to Section 2161.181); TEX. LOC.
GOV’T CODE § 335.076(c)–(d) (referencing sections 2161.181 and 2161.182 with regard to certain
sports and venue projects); TEX. TRANSP. CODE § 223.041(b) (requiring transportation
expenditures “in accordance with the good-faith-effort procedures outlined in the rules adopted by
the comptroller”). Yet more statutes independently mandate good faith efforts toward HUB-related
goals as well. 23 See, e.g., TEX. TRANSP. CODE §§ 284.007(a) (contracts for transportation projects
in certain counties), 431.109(b) (contracts for public transportation in certain counties). Others
simply provide that the government entity “shall consider” contracting with HUBs. See, e.g., TEX.
GOV’T CODE § 1232.124(2); TEX. HEALTH & SAFETY CODE § 102.204. Some statutes even set
numerical goals directly. See TEX. GOV’T CODE § 493.012(a) (requiring “a good faith effort to
assist historically underutilized businesses to receive at least [thirty] percent of the total value of”
certain contracts).

In terms of constitutional propriety, however, these race- and sex-based utilization goals
necessarily fail strict scrutiny’s “daunting two-step examination.” See SFFA, 600 U.S. at 206–07.
First, any “effort to alleviate the effects of societal discrimination is not a compelling interest.”
Shaw v. Hunt, 517 U.S. 899, 909–10 (1996). Neither can outdated disparity studies support a
compelling interest where they rest on “an amorphous claim that there has been past discrimination
in a particular industry.” Croson, 488 U.S. at 499. While “significant statistical disparities can
support an inference of discrimination,” “disparities [without more] don’t cut it.” Nuziard, 721 F.

22
A prior attorney general concluded that certain state boards were required to comply with a predecessor to
Section 2161.181 “when contracting for the services of investment brokers.” Tex. Att’y Gen. Op. No. DM-184 (1992)
at 4. This opinion observed that the relevant boards of trustees were “required to make a good faith effort to assist
disadvantaged businesses to receive at least [ten] percent of the total value of all contract awards.” Id. Because that
requirement is no less unconstitutional today than before, Miller v. Davis, 150 S.W.2d 973, 978 (Tex. 1941) (“If an
Act is unconstitutional, it is no law at all.”), DM-184 is overruled.
23
Some prove less exacting and require good faith efforts without quantitative goals. See, e.g., TEX. GOV’T
CODE §§ 2157.068(c), 2306.5553(a) (both requiring “good faith efforts to provide contracting opportunities for, and
to increase contract awards to, historically underutilized businesses”). Even less rigorous standards control in other
contexts. See, e.g., TEX. UTIL. CODE § 12.252 (authorizing the Public Utilities Commission to require regulated
utilities “to make an effort to overcome the underuse of historically underutilized businesses” without reference to
good faith); TEX. INS. CODE § 443.0135(a) (requiring that the bidding process for special deputies to include
“procedures to promote the participation” of HUBs); TEX. GOV’T CODE § 447.013(i) (providing that recipients under
the advanced clean energy project grant and loan program are “encouraged to purchase goods and services” from
HUBs). Regardless, none bears claim to constitutional reprieve for the race- and sex-based preferences therein.
- Page 31

Supp. 3d at 480 (cleaned up). Studies that want for “the who, what, when, where, why, and how
of relevant discrimination” provide nothing by way of “guidance for a legislative body to
determine the precise scope of the injury it seeks to remedy.” Id. at 480–81 (cleaned up).

Nor is it of any moment that the HUB framework calls for a “good faith effort” when
utilization goals serve as de facto quotas that are anything but narrowly tailored. “Whether . . .
described as a quota or a goal,” these statutory imperatives inescapably reflect “a line drawn on
the basis of race and ethnic status.” Bakke, 438 U.S. at 289. Public institutions “cannot establish
quotas for members of certain racial groups or put members of those groups on separate . . . tracks”
for government benefits, “insulate applicants who belong to certain racial or ethnic groups
from . . . competition,” or justify differential treatment in public programs through an interest in
achieving “some specified percentage of a particular group merely because of its race or ethnic
origin.” Grutter, 539 U.S. at 334, 329–30 (cleaned up). This system of race- and sex-based
benchmarking therefore proves unlawful in that it inescapably treats “two or more classifications
of similarly situated persons . . . differently,” Gallegos-Hernandez v. United States, 688 F.3d 190,
195 (5th Cir. 2012), and any “semantic distinction is beside the point,” Bakke, 438 U.S. at 289.
See also, e.g., W.H. Scott Const. Co. v. City of Jackson, 199 F.3d 206, 215 (5th Cir. 1999)
(explaining “it is irrelevant whether the [program itself] establishes ‘goals’ or ‘quotas’ for . . .
participation” in a minority- and women-owned business contracting program); Bras v. Cal. Pub.
Utilities Comm’n, 59 F.3d 869, 874–75 (9th Cir. 1995) (same, emphasizing “the economic realities
. . . rather than the label” and holding statutory preferences were not “immunized from scrutiny”).

iii. Race- and sex-based preferences in HUB subcontracting
mandate, and fail, strict scrutiny

HUB programs also impermissibly extend race- and sex-based preferential treatment to
subcontractors. Some provisions allow state agencies to satisfy utilization goals indirectly through
HUB subcontractors. See, e.g., TEX. GOV’T CODE § 2306.5553(c) (providing that the Texas State
Affordable Housing Corporation “may achieve annual procurement goals under this section by
contracting directly with historically underutilized businesses or by contracting indirectly with
those businesses through the provision of subcontracting opportunities”). More commonly, HUB
provisions mandate “good faith” efforts to expand HUB subcontracting. See, e.g., id. § 2155.505(c)
(requiring the Comptroller to “strongly encourage” non-HUB vendors on multiple award schedules
to use HUBs or small businesses, with vendors that do not make “a good faith effort” subject to
award-schedule exclusion); see also, e.g., TEX. INS. CODE § 443.0135(b) (requiring that bidders
seeking selection as special deputies for a receiver rehabilitating or liquidating an insurer detail
their “efforts” to engage HUBs as subcontractors and plans for using HUBs to administer the
receivership estate).

Under Chapter 2161, agencies must “determine whether there will be subcontracting
opportunities” under certain large contracts “before the agency solicits bids, proposals, offers, or
other applicable expressions of interest for the contract.” TEX. GOV’T CODE § 2161.252(a). If
subcontracting appears probable, bidders must submit HUB subcontracting plans to qualify as
responsive. Id. § 2161.252(a)–(b). Awarded contracts then incorporate these plans as binding
- Page 32

terms, requiring prime contractors to “make good faith efforts to implement the plan.” 24 Id.
§ 2161.253(a). Contractor participation in a mentor-protégé program and protégé subcontracting
are said to evince such good faith efforts. Id.; see also id. § 2161.065(a) (requiring the comptroller
to “design a mentor-protege program to foster long-term relationships between prime contractors”
and HUBs to increase the latter’s ability “to receive subcontracts under a state contract”).
Moreover, should subcontracts deviate from the plan, the prime contractor must explain the
discrepancy to the agency and “describe the good faith efforts made to find and subcontract with
another [HUB].” Id. § 2161.253(b). Noncompliance ultimately triggers penalties, as agencies may
bar prime contractors from future contracting opportunities. Id. § 2161.253(d).

Under strict scrutiny, however, a compelling governmental interest demands proof of either
“prior discrimination by the governmental unit involved” or “passive participa[tion] in a system
of racial exclusion.” Croson, 488 U.S. at 492 (cleaned up); Lomack v. City of Newark, 463 F.3d
303, 307 (3d Cir. 2006) (same). Absent that, “race-based remedial measures violate equal-
protection principles.” Vitolo v. Guzman, 999 F.3d 353, 361 (6th Cir. 2021). Yet past
discrimination arising from the independent subcontracting decisions of prime contractors will, by
its very nature, rarely implicate direct government participation. Discrimination by the government
itself would instead involve its refusal to engage prime contractors on the basis of race or sex.
Moreover, to the extent that the HUB program purports to remedy the government’s own prior
direct discrimination, its extension into subcontracting proves “overinclusive” and lacks the
requisite “close fit” to the targeted harm—again failing strict scrutiny. Nuziard, 721 F. Supp. 3d
at 489; see also Croson, 488 U.S. at 493 (explaining that strict scrutiny “ensures that the means
chosen ‘fit’ this compelling goal so closely that there is little or no possibility that the motive for
the classification was illegitimate racial prejudice or stereotype”).

HUB provisions targeting subcontractors also falter on claims of the government’s bygone
passive participation. The disparity study does not “target a specific episode of past
discrimination,” Vitolo, 999 F.3d at 361, and merely highlights statistical disparities between
groups. Neither does the report demonstrate that the government “induce[d], encourage[d] or
promote[d] private persons to accomplish what it is constitutionally forbidden to accomplish.” See
Norwood v. Harrison, 413 U.S. 455, 465 (1973); see also Nuziard, 721 F. Supp. at 483 (observing
the record “contains no concrete evidence of government ‘induction, encouragement, or

24
As one opinion by then-Attorney General Cornyn unfortunately demonstrated, such “good faith efforts”
oftentimes amount to little more than added costs to taxpayers without any accompanying benefits. Specifically, that
administration determined that use of a so-called “pass-through” entity could count toward a vendor’s good faith HUB
participation goal. See generally Tex. Att’y Gen. Op. No. JC-0315 (2000). But these schemes are rightly subject to
criminal prosecution at the federal level. See, e.g., Kousisis v. United States, 605 U.S. 114, 119 (2025) (observing that
participation “as a mere ‘pass-through’ entity” was fraudulent and “contravened DOT’s rule that a contributing
disadvantaged business must ‘perfor[m] a commercially useful function’”). And even were they not, such practices
not only run afoul of the Texas Equal Rights Amendment but may implicate the Texas Gift Clauses as well. See
Borgelt v. Austin Firefighters Ass’n, IAFF Loc. 975, 692 S.W.3d 288, 301 (Tex. 2024) (providing that an expenditure
of public funds must not be “gratuitous” and must have as its “predominant objective” the accomplishment of “a
legitimate public purpose, not to provide a benefit to a private party”). This leaves no lawful foundation for contractual
arrangements that provide participants with compensation for fulfilling racial or sex-based criteria rather than valid
commercial contributions. We therefore overrule JC-0315.
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promotion’ of credit discrimination”). At bottom, “[p]recedent requires specifics to prove even
passive participation.” Nuziard, 721 F. Supp. 3d at 483. But there are no such specifics on which
to shore these subcontracting provisions and, as such, they cannot survive constitutional scrutiny.

iv. The procurement process is infused with race- and sex-
based priority for HUBs over lower bids by competitors

HUBs also receive significant advantages in contracting and procurement. Various statutes
require that government entities consider their ability to comply with “laws and rules” involving
HUBs when dispensing lucrative awards. See, e.g., TEX. EDUC. CODE § 44.031(b)(6) (School
Districts); TEX. NAT. RES. CODE § 31.069(f) (General Land Office); TEX. GOV’T CODE
§ 2269.055(a)(4), (b)(1) (Construction Projects); TEX. WATER CODE § 60.458(6) (Navigation
Districts). Yet more graft this express fixation on HUB compliance into the mandatory “best
value” considerations. See, e.g., TEX. EDUC. CODE §§ 51.9335(b)(6) (Institutions of Higher
Education), 73.115(b) (M.D. Anderson Cancer Center), 74.008(b)(6) (University of Texas Medical
Branch at Galveston); TEX. LAB. CODE § 352.060(c)(6) (Rehabilitation Council of Texas).
Likewise, other statutes provide that government entities “may” choose to do so themselves, 25
TEX. GOV’T CODE § 2155.144(d)(6) (Health and Human Services Agencies); TEX. HEALTH &
SAFETY CODE §§ 12.055(c)(6), 533.016(c)(6), 533A.016(c)(6) (Department of State Health
Services and Local Health Authorities); TEX. HUM. RES. CODE § 32.043(c)(6) (Public
Disproportionate Share Hospitals); TEX. LOC. GOV’T CODE § 252.043(b)(6) (Municipalities)—
though this frequently comes with a requirement that the entity document whether they
“considered . . . relevant factors” like HUB compliance in making their decision, see, e.g., TEX.
GOV’T CODE § 2155.144(c); TEX. HEALTH & SAFETY CODE §§ 12.055(b), 533.016(b),
533A.016(b); TEX. HUM. RES. CODE § 32.043(b). This collectively operates to throw open the
public coffers for HUBs that are not “the lowest bidder.” Walker v. Univ. of Tex. Med. Branch,
No. 1:08-CV-417, 2009 WL 2461024, at *8 (E.D. Tex. Aug. 7, 2009) (citing TEX. EDUC. CODE
§ 74.008(b)); accord E-Transit, Inc. v. City of Eagle Pass, No. DR-23-CV-00021, 2023 WL
3681722, at *2 (W.D. Tex. Apr. 13, 2023) (citing TEX. LOC. GOV’T CODE § 252.043(b)); see also,
e.g., TEX. GOV’T CODE § 2267.053(b-1); TEX. LOC. GOV’T CODE § 252.043(a). Even more, state
agencies subject to sunset review find themselves in a situation where HUB consideration takes
on existential importance: The Sunset Review Commission evaluates compliance with “state law
and applicable rules of any state agency regarding purchasing guidelines and programs for
historically underutilized businesses” when determining whether a public need exists for the
agency’s continued existence. See, e.g., TEX. GOV’T CODE § 325.011(9)(B).

Ultimately, the incorporation of HUB compliance into contracting and procurement
decisions unconstitutionally treats race and sex as proxies for merit. This preferential pipeline is
nothing short of “discrimination for its own sake, which the Constitution forbids.” SFFA, 600 U.S.
at 209 (cleaned up); see also TEX. CONST. art. I, § 3a. Protected characteristics “may never be used

25
Another category of statutes proves similar in focusing on the would-be recipient’s own compliance with
HUB-related goals. See, e.g., TEX. GOV’T CODE § 2267.053(b-1)(7) (Infrastructure Projects); see also, e.g., TEX.
WATER CODE § 15.435(h)(2) (predicating financial assistance related to bond enhancement agreements on an
applicant’s professed willingness to “comply with . . . law[s] relating to” HUBs).
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as a ‘negative’” against disfavored groups, and legislative reimagination of what constitutes the
“best value” to a governmental entity is “hard to take seriously.” SFFA, 600 U.S. at 218. Both
government contracting and procurement are no different from college admissions in that they are
“zero-sum,” meaning “[a] benefit provided to some . . . but not . . . others necessarily advantages
the former group at the expense of the latter.” Id. at 218–19; see also, e.g., Parents Involved, 551
U.S. at 719. Neither does it matter “whether a statute ‘requires’ the use of such measures” when
the question is instead “whether it authorizes or encourages them.” Bras, 59 F.3d at 874–75
(emphasizing “economic realities . . . rather than the label” in the context of a minority- and
women-owned businesses contracting program); see also, e.g., W.H. Scott Const., 199 F.3d at 215
(describing such labels as constitutionally “irrelevant”). Bidders are, by definition, competing
directly against each other for a limited number of opportunities—meaning race- or sex-based
winners come with race- or sex-based losers. See, e.g., Hou. Contractors Ass’n v. Metro. Transit
Auth. of Harris Cnty., 993 F. Supp. 545, 548 (S.D. Tex. 1997) (invalidating a minority-owned
business program because, inter alia, it “allows [the government] to take current opportunities
from a non-offending [demographic] and allocate them to an uninjured [demographic]”), vacated
and remanded on other grounds sub nom., Hou. Contractors Assoc. v. Metro. Transit Auth. of
Harris Cnty., 189 F.3d 467 (5th Cir. 1999). This crudely reduces the protected characteristics of
those outside the chosen demographic to a negative factor when, “in its absence, members of some
. . . groups would be [benefitted] in greater numbers than they otherwise would have been.” SFFA,
600 U.S. at 219; accord W.H. Scott Const., 199 F.3d at 215.

v. HUB programs offer exclusive race- and sex-based
assistance, training, outreach, and access to the
detriment of non-HUBs

HUB programs also provide targeted assistance, training, outreach, and access that is
unavailable to those who want for membership in the chosen race- or sex-based classes. Under
Chapter 2161, for example, the Comptroller offers HUBs assistance and training on state
procurement procedures, advises them of available state contracts, and encourages registration on
the Comptroller’s master bidders list. TEX. GOV’T CODE § 2161.062(b)–(c). This extends beyond
Chapter 2161 to include specific procurement methods, like reverse auctions. Id. § 2155.085(a)(2).
The Comptroller even notifies HUBs of contracts that are available using the reverse auction
procedure. Id. § 2155.085(a)(3). Moreover, HUBs are given assistance with compliance and
government relations. For instance, the Small Business Advocate and OSBA assist HUBs in
dealing with federal, state, and local governmental agencies and in complying with the laws
administered by every level of government. Id. §§ 481.0067(c)(3), .0068(b)(5), (13). OSBA also
supplies information, training, operational assistance, and other outreach. Id. § 481.0068(b)(10),
(12), (15)–(16), (18).

Targeted outreach and access are equally prevalent. The Comptroller provides HUBs with
orientation packages on certification or recertification with lists of state purchasing personnel,
information on electronic commerce opportunities, and procurement process details. Id.
§ 2161.062(d). Outreach extends to local governments and certain highly regulated sectors, like
utilities. Certain municipalities, for example, must contact at least two HUBs on a rotating basis
for expenditures between $3,000 and $100,000. TEX. LOC. GOV’T CODE § 252.0215. And the
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Public Utility Commission and Department of Economic Development inform HUBs of
aggregator operation opportunities. TEX. UTIL. CODE § 39.353(h). HUBs are also granted special
access to senior managers and procurement personnel through forums held at state agency offices.
TEX. GOV’T CODE § 2161.066(a)–(b). Agencies with biennial appropriations over $10 million must
participate, send personnel, and notify contractors of subcontracting opportunities. Id.
§ 2161.066(c). Even more, agencies with HUB coordinators must design their own HUB forum
program and sponsor HUB presentations at the agency. Id. § 2161.066(d). The Comptroller and
other agencies must “aggressively identify and notify” HUBs of presentation opportunities and
must advertise those opportunities in HUB-targeted trade publications. Id. § 2161.066(e).

But this collective scheme runs headlong into the “well established” reality “that when the
government distributes burdens or benefits on the basis of individual racial classifications, that
action is reviewed under strict scrutiny.” Parents Involved, 551 U.S. at 720. Exclusive assistance,
training, outreach, and access for HUBs impermissibly distributes benefits based on protected
demographics on pain of severe criminal and civil penalties for attempted participation by entities
who, for example, cannot qualify as HUBs simply because of their racial or gender composition.
See TEX. GOV’T CODE §§ 2161.231, 2252.123, 2252.125. Nor can there be any compelling interest
in such programs when the disparity study on which they rely does not “target a specific episode
of past discrimination,” Vitolo, 999 F.3d at 361, let alone invoke evidence that Texas directly or
passively participated in specific discrimination, Norwood, 413 U.S. at 465. As such, the HUB
framework openly endorses stripping “current opportunities from a non-offending [demographic]
and allocat[ing] them to an uninjured [demographic],” Hou. Contractors Ass’n, 993 F. Supp. at
548—without “reasonable durational limits” or “logical end point,” which belies any constitutional
foundation. SFFA, 600 U.S. at 212.

2. Texas’ DBE programs are unconstitutional

Texas’s Disadvantaged Business Enterprise (DBE) programs ostensibly mirror the federal
model and regulate transportation contracting across state, regional, and local governments. Yet
while federal rules are curated to require case-by-case assessments of social and economic
disadvantage, which proves constitutionally critical, Texas DBE programs embrace categorical
preferences that are presumptively discriminatory. See infra Part II.A.2.i. Not only do these
programs openly rely on sweeping race- and sex-based advantages that are unmoored from
cognizable claims of past discrimination, but the inclusion of avowedly neutral mechanics does
nothing to redeem the programs’ facially invalid ends. See infra Part II.A.2.ii. In short, Texas’
DBE programs prove unconstitutional.

i. DBE programs rely on facial distinctions between race
and sex, triggering strict scrutiny

The Texas Department of Transportation (“TXDOT”) administers the statewide DBE
program. TEX. TRANSP. CODE § 201.702; 49 C.F.R. §§ 26.1–Pt. 26, App. D. Aiming to award
“state or federally funded contracts[] . . . to disadvantaged businesses,” TEX. TRANSP. CODE
§ 201.702(a)(1) (discussing “construction, maintenance, supply, and service contracts”), the
program applies to “all department contracts and purchases funded in whole or in part with
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[certain] federal funds.” 43 TEX. ADMIN. CODE § 9.200(b). See also, e.g., 43 TEX. ADMIN. CODE
§ 9.201(a) (articulating TXDOT’s general policy of accommodating DBEs). Other DBE programs
likewise extend to regional and local governance as well. See, e.g., TEX. LOC. GOV’T CODE
§§ 351.1035 (county jail facilities), 375.222 (municipal management districts); TEX. TRANSP.
CODE §§ 91.053 (state rail facilities), 366.184 (regional tollway authorities), 370.183 (regional
mobility authorities), 451.251 (metropolitan rapid transit authorities); TEX. TAX CODE § 311.0101
(county or municipally created reinvestment zones).

Texas DBE programs largely reference, incorporate, and build on aspects of the federal
DBE program. 26 See generally 43 TEX. ADMIN. CODE § 9.200(a) (professing “compliance with . . .
Title 49, Code of Federal Regulations, Part 26”); Tex. Dep’t of Transp. v. Jones Bros. Dirt &
Paving Contractors, Inc., 92 S.W.3d 477, 483 (Tex. 2002) (explaining “it is the federal regulations
about DBEs with which TxDOT had to comply to receive federal funding for the project”).
TXDOT’s annual DBE award goals, for example, must “approximate the federal requirement for
federal money used for highway construction and maintenance consistent with other applicable
state and federal law.” TEX. TRANSP. CODE § 201.702(b). Additionally, federal standards are tied
to bidders’ good faith efforts to meet DBE contract goals. 43 TEX. ADMIN. CODE §§ 9.226,
.227(b)(2), .237(a). TXDOT is also obligated to “assess the availability” of DBEs in Texas, TEX.
TRANSP. CODE § 201.702(a)(2); accord 49 C.F.R. § 26.45(b), and identify DBEs capable of
providing supplies, materials, equipment, or services, TEX. TRANSP. CODE §§ 91.053(a)(2),
201.702(a)(3), 366.184(a)(2), 370.183(a)(2); accord 49 C.F.R. § 26.45(c); see also, e.g., TEX. TAX
CODE § 311.0101(b)(4) (requiring identical consideration for DBEs in designated zones).

On this backdrop, state and local DBE programs typically define a “disadvantaged
business” by reference to “socially and economically disadvantaged” individuals or “socially
disadvantaged” persons. 43 TEX. ADMIN. CODE § 9.202(4); see also, e.g., TEX. LOC. GOV’T CODE
§§ 351.1035(a), 375.003(4). TXDOT regulations offer two paths to “socially and economically
disadvantaged” status: The race- and sex-neutral path follows the federal approach. 27 See 43 TEX.
ADMIN. CODE § 9.202(15)(A) (defining such individuals as those “whom a recipient finds to be a
socially and economically disadvantaged individual on a case-by-case basis”). The second path,

26
Statewide policy also notes that the DBE program is “consistent, to the extent possible, with [the HUB
program under] Government Code, Chapter 2161,” 43 TEX. ADMIN. CODE § 9.200(a), and thereby prioritizes federal
congruence over full HUB integration. See also, e.g., TEX. GOV’T CODE § 2161.004(c) (providing that the HUB
program is inapplicable “to a project or contract subject to [Transportation Code] Section 201.702,” which governs
TXDOT’s statewide DBE program). Nevertheless, the memorandum between TXDOT and the Comptroller
recognizes TUCP-certified DBEs as HUBs. 43 TEX. ADMIN. CODE § 9.353(a).
27
Although the federal rules define DBEs as businesses owned by “socially and economically disadvantaged
individuals,” they prohibit determinations “based in whole or in part on race or sex” and mandate “case-by-case”
evaluations. Id. § 26.5. This is no accident: The federal DBE framework received significant overhaul in 2025—after
the U.S. Solicitor General notified Congress that the program was “unconstitutional to the extent . . . it creates a
presumption of social or economic disadvantage based on race or sex,” Letter from D. John Sauer, U.S. Solicitor
General, to Hon. Mike Johnson, Speaker, U.S. House of Representatives (June 25, 2025), https://www.justice.gov
/oip/media/1404871/dl?inline—to ensure DBE programs operate “in a nondiscriminatory fashion.” Disadvantaged
Business Enterprise Program and Disadvantaged Business Enterprise in Airport Concessions Program Implementation
Modifications, 90 Fed. Reg. 47,969 (Oct. 3, 2025) (codified at 49 C.F.R. pts. 23, 26).
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on the other hand, sets out a rebuttable presumption that “Black Americans,” “Hispanic
Americans,” “Native Americans,” “Asian-Pacific Americans,” “Subcontinent Asian Americans,”
and women are socially and economically disadvantaged individuals. Id. § 9.202(15)(B)(i)–(vi).
Local Government Code provisions similarly deem “black Americans, Hispanic Americans,
women, Asian Pacific Americans, and American Indians” socially disadvantaged by blithely
invoking “the effects of discriminatory practices or similar insidious circumstances” beyond their
control. TEX. LOC. GOV’T CODE §§ 351.1035(a)(1), 375.003(4)(A).

But these overt race- and sex-based classifications render Texas’ DBE framework
presumptively discriminatory. 28 See Communities for Equity, 459 F.3d at 694; SECSYS, 666 F.3d
at 685. It bears repeating that government-sponsored sorting “on the basis of race, alienage, or
national origin trigger strict scrutiny.” United States v. Skrmetti, 605 U.S. 495, 510 (2025); accord
McLean, 725 S.W.2d at 697–98 (same, Texas ERA). As discussed in further detail below,
however, this anachronistic approach to DBEs lacks any constitutional foundation and the “moral
imperative of . . . neutrality” demands invalidation. See Bartlett, 556 U.S. at 21 (citation omitted).

ii. DBE programs create de facto race- and sex-based
quotas and want for any narrowly tailored pursuit of a
compelling governmental end

Texas’ DBE programs provide preferred access to valuable contracts that are unavailable
to, or more difficult to obtain by, similarly situated persons outside of the preferred demographics.
See, e.g., 43 TEX. ADMIN. CODE §§ 9.201(a)(4) (limiting DBE participation to firms that fully meet
the program’s eligibility standards), .202(4) (defining DBEs in terms of socially and economically
disadvantaged individuals), .202(15)(B) (defining socially and economically disadvantaged
individuals in terms of race and sex); see also, e.g., id. § 9.305 (providing that certain DBEs are
“automatically certified” for participation in the Small Business Enterprise Program, a
supplementary regime for TXDOT contracts that lack a DBE or HUB goal). Municipal
management districts, for instance, must increase DBE awards, assess disparities between
available DBEs and actual awards, and remedy any gaps. TEX. LOC. GOV’T CODE § 375.222.
Various DBE frameworks also set numerical goals for contract or fund shares allocated to DBEs.
See, e.g., TEX. TRANSP. CODE §§ 366.184(a)(1), 451.251; 43 TEX. ADMIN. CODE § 9.221(a).
Governmental entities may even intensify race-conscious measures by adjusting contract goals if
benchmarks seem beyond reach. 43 TEX. ADMIN. CODE § 9.222(b). To enforce these objectives,
entities must at times specifically consider DBEs during contract awards and require prime
contractors’ bids or proposals to demonstrate their intent to utilize DBEs as subcontractors. TEX.
LOC. GOV’T CODE § 351.1035(b), (c)(3). Governmental entities may also restrict awards to bidders
demonstrating good faith efforts to achieve DBE participation targets. 43 TEX. ADMIN. CODE

28
To be sure, some DBE provisions neither define nor reference race and sex. See, e.g., TEX. TRANSP. CODE
§§ 91.053 (state rail facilities), 370.183 (regional mobility authorities); TEX. TAX CODE § 311.0101(a)–(c)
(reinvestment zones); cf. also, e.g., TEX. TAX CODE § 311.0101(d) (referencing “minority business enterprises and
women-owned business enterprises” without indicating such entities are synonymous with DBEs). While it is unclear
whether these provisions follow the federal government’s newly refined, case-by-case approach—ignoring race and
sex, 49 C.F.R. § 26.5—anything less would confront the same constitutional infirmities discussed herein.
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§ 9.226. Further support comes through mandates that DBEs receive targeted notice of
opportunities, procedural explanations, and offers of assistance in the overall process. See TEX.
TRANSP. CODE §§ 201.702(a)(4), 366.184(a)(3); TEX. LOC. GOV’T CODE § 351.1035(c)(1)–(2).

This backdrop raises various problems that betray any claim of constitutional propriety.
First, the participation benchmarks function as de facto racial and sex-based quotas by
apportioning public benefits on the basis of protected characteristics—without any “reasonable
durational limits” or “a logical end point,” no less. SFFA, 600 U.S. at 212 (quoting Grutter, 539
U.S. at 342). These programs consecrate fixed, alternate tracks: presumed qualification for some
demographics and either case-by-case scrutiny or extra hurdles for others. Compare 43 TEX.
ADMIN. CODE § 9.202(15)(A) (requiring a “case-by-case” determination of an individual’s
“socially and economically disadvantaged” status), with id. § 9.202(15)(B) (listing racial and
ethnic groups that are “rebuttably presumed” to qualify). This means that “[c]ontractors who are
not DBEs must compete . . . under . . . actual and identifiable impediments.” Hou. Contractors
Ass’n, 993 F. Supp. at 557. Nor would expanding this “two-track system into a multitrack
program” remedy the underlying constitutional flaw. Bakke, 438 U.S. at 315. Again, schemes like
this invariably “distribute[] burdens or benefits” on the basis of protected characteristics. Parents
Involved, 551 U.S. at 720.

Second, this preferential system also lacks the “extraordinary justification” that must
underlie a compelling governmental interest. See Feeney, 442 U.S. at 272. The DBE framework’s
fixed catalogue of preferred demographics is said to represent those who have “suffered the effects
of discriminatory practices or similar insidious circumstances over which they have no control.”
See, e.g., TEX. LOC. GOV’T CODE §§ 351.1035(a)(1), 375.003(4)(A). But this glibly embraces “a
generalized assertion that there has been past discrimination in an entire industry.” Croson, 488
U.S. at 498. That is no more of a compelling interest than a professed “effort to alleviate the effects
of societal discrimination.” Shaw, 517 U.S. at 909–10. Indeed, courts have previously invalidated
DBE programs for this very reason. See, e.g., W.H. Scott Const., 199 F.3d at 219 (rejecting a DBE-
participation goal for want of “particularized findings of discrimination” in the city’s construction
industry); Hou. Contractors Ass’n, 993 F. Supp. at 556, 558 (same, Harris County’s former DBE
system); Kossman Contracting Co. v. City of Houston, No. CV H-14-1203, 2016 WL 1104363,
at *5 (S.D. Tex. Mar. 22, 2016) (same, Houston’s “Minority and Women Owned Business
Enterprise . . . Program”); see also, e.g., Monterey Mech. Co. v. Wilson, 125 F.3d 702, 713 (9th
Cir. 1997) (observing that a minority- and women-owned business program failed constitutional
scrutiny where “the legislative findings [did] not say whether the ‘economically disadvantaged
position’ has to do with past active or passive discrimination”). Were it enough to identify “general
social ills and call it a day,” of course, “any race-based program could be justified considering our
country’s history of race-based discrimination.” Nuziard, 721 F. Supp. 3d at 480. But our
constitutional foundation “forbids the punishment of [one] generation for the wrongs of the last,”
Hou. Contractors Ass’n, 993 F. Supp. at 558, and equal protection is what “guarantees individuals
that their ethnicity or sex will not turn into legal disadvantages as the political power of one or
another group waxes or wanes.” Monterey Mech., 125 F.3d at 715.
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Were there remaining doubt, these terminal failures are confirmed by the overinclusive
scope of DBE beneficiaries. Included among the groups TXDOT “presume[s] to be socially and
economically disadvantaged,” for example, are all “women;” all “persons of Mexican, Puerto
Rican, Cuban, Dominican, Central or South American, or other Spanish or Portuguese culture or
origin, regardless of race;” all “persons who are American Indians, Eskimos, Aleuts, or Native
Hawaiians;” as well as all “persons having origins in any of the Black racial groups of Africa” or
“whose origins are from Japan, China, Taiwan, Korea, Burma (Myanmar), Vietnam, Laos,
Cambodia (Kampuchea), Thailand, Malaysia, Indonesia, the Philippines, Brunei, Samoa, Guam,
the U.S. Trust Territories of the Pacific Islands (Republic of Palau), the Commonwealth of the
Northern Mariana Islands, Macao, Fiji, Tonga, Kirbati, Juvalu, Nauru, Federated States of
Micronesia, or Hong Kong” in addition to “India, Pakistan, Bangladesh, Bhutan, the Maldives
Islands, Nepal, or Sri Lanka.” 43 TEX. ADMIN. CODE § 9.202(15)(b)(i)–(vi). Reduced simply, these
categories presume disadvantage for virtually the entire global population—save a narrow class of
men defined by ancestry. Not only is this sweeping list lifted verbatim from the federal regulatory
presumptions that were struck after the U.S. Solicitor General notified Congress in 2025 that its
DBE program was “unconstitutional to the extent . . . it creates a presumption of social or economic
disadvantage based on race or sex,” Letter from D. John Sauer, U.S. Solicitor General, supra n. 27;
see also 26 C.F.R. § 26.5 (2024) (prior categories), but it reflects the haphazard brand of
overinclusion that “illustrates the undifferentiated nature of the plan,” Wygant v. Jackson Bd. of
Educ., 476 U.S. 267, 277 (1986). This “strongly impugns . . . [any] claim of remedial motivation”
and invites “one [to] legitimately ask why [some beneficiaries] are forced to share this ‘remedial
relief’ with an Aleut citizen who moves [in] . . . tomorrow.” Croson, 488 U.S. at 506.

Neither does the inclusion of race- or sex-neutral mechanics redeem the DBE program’s
facially invalid ends. To be sure, TXDOT’s regulations profess prioritization of “race-neutral
means” to achieve annual DBE participation goals on federally assisted contracts. 43 TEX. ADMIN.
CODE § 9.220(a). These means promote participation by all small businesses—not merely DBEs—
and include avowedly demographic-neutral approaches. 29 Id. § 9.202(13); see also id. § 9.220(b)
(providing examples). TXDOT may nonetheless resort to openly race- and sex-conscious measures
if those neutral efforts falter. Id. § 9.221(a). Every three federal fiscal years, TXDOT sets overall
annual DBE goals and projects the portion of each overall goal it expects to meet through race-
neutral and race-conscious means. Id. §§ 9.213(a), .214(b), .217(b)(3). If TXDOT expects to
exceed the overall DBE participation goal, it reduces or eliminates contract goals for the fiscal
year’s remainder. Id. § 9.222(a). TXDOT likewise forgoes contract goals entirely if neutral means
alone will meet the goal or if the goal was achieved or surpassed using neutral methods during the
prior two years. Id. § 9.223. Either way, these measures ultimately target DBEs—including those
who qualify simply because they are owned by women or racial minorities. Id. § 9.202(12).

But use of ostensibly race- and sex-neutral tools becomes constitutionally infirm when
subordinated to the greater pursuit of demographic-specific participation goals. Programs like

29
Though we need not belabor the point, it is unclear how “ensuring distribution of the DBE directory to the
widest feasible number of potential contractors” can be used to assist all small businesses rather than DBEs alone. See
43 TEX. ADMIN. CODE § 9.220(b)(8).
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these can survive constitutional scrutiny only if founded on “serious, good faith consideration of
workable race-neutral alternatives.” Grutter, 539 U.S. at 339; accord 43 TEX. ADMIN. CODE
§ 9.201(a)(3) (requiring TXDOT to “ensure that [its] DBE program is narrowly tailored”). But
narrow tailoring is only one prong of the “daunting two-step examination known in our cases as
‘strict scrutiny.’” SFFA, 600 U.S. at 206. A provision must also “further compelling governmental
interests.” Id. at 207. Here, of course, the manifest purpose of DBE programs is to increase DBE
participation in transportation contracting and procurement. To that end, TXDOT sets annual goals
for awarding contracts to DBEs and strives to meet them. TEX. TRANSP. CODE § 201.702(a)(1);
see also 43 TEX. ADMIN. CODE § 9.213(a) (confirming these goals target “DBE participation in
DOT-assisted contracts”). TXDOT’s policies remove barriers to DBE participation in contracts,
foster DBE development to promote competition, and equip recipients with tools to curate DBE
opportunities. 43 TEX. ADMIN. CODE § 9.201(a)(5)–(7). Specialized measures reinforce these
objectives: TXDOT mandates use of financial institutions owned by socially and economically
disadvantaged individuals, encourages contractors to do the same, and offers technical assistance
for DBEs to compete in highway construction. Id. §§ 9.207, .211, .241. Texas’ DBE programs
therefore reduce to nothing short of open, discriminatory exclusion of contractors that were born
into one of the disfavored demographics.

Suffice it to say that race- and sex-neutral means cannot validate unconstitutional ends. A
government’s “preferential purpose” of increasing participation by “a particular group merely
because of its race or ethnic origin . . . must be rejected not as insubstantial but as facially invalid.”
Bakke, 438 U.S. at 307; see also Parents Involved, 551 U.S. at 740 (stating that “using race simply
to achieve racial balance would be patently unconstitutional” (internal quotations omitted)). Far
from compelling, such an interest in “[p]referring members of any one group for no reason other
than race or ethnic origin” represents the very “discrimination for its own sake” that “the
Constitution forbids.” SFFA, 600 U.S. at 208–09 (quoting Bakke, 438 U.S. at 306–07). To describe
this pernicious pursuit is to condemn it under the U.S. and Texas Constitution alike.

3. Programs targeting minority- and women-owned businesses for
government largesse also fail strict scrutiny

Yet more statutes systematically authorize preferences for minority- and women-owned
businesses in public contracting and, in turn, purport to insulate race- and sex-based
classifications—triggering strict scrutiny. See infra Part II.A.3.i. Preferential treatment for these
businesses based on race and sex advances no compelling governmental interest. See infra
Part II.A.3.ii. Likewise, the framework’s avowed aspirational goals are nothing more than de facto
quotas that fail narrow tailoring. See infra Part II.A.3.iii. The scheme also provides preferential
treatment in contracting, direct assistance, and targeted forms of outreach—all on the basis of sex
and race. See infra Part II.A.3.iv. And finally, advantaging nonprofit organizations based on these
same immutable traits proves equally unconstitutional. See infra Part II.A.3.v. These measures
violate the U.S. and Texas Constitutions by imposing burdens and benefits based on race and sex,
perpetuating stereotypes and eroding the constitutional imperative of equal treatment.
- Page 41

i. Texas law mandates preferences for minority- and
women-owned businesses, triggering strict scrutiny

Texas law embeds pernicious demographic preferences throughout its public-contracting
regime. A host of agencies are statutorily commanded to prioritize minority- and women-owned
businesses. See, e.g., TEX. AGRIC. CODE § 12.029 (Department of Agriculture); TEX. GOV’T CODE
§§ 466.107, .151 (Department of Licensing and Regulation), 2306.6734 (Department of Housing
and Community Affairs); TEX. HUM. RES. CODE § 122.019 (Workforce Commission); TEX. NAT.
RES. CODE §§ 161.131–.132 (Veteran’s Land Board); TEX. OCC. CODE § 2026.152 (Racing
Commission). Various political subdivisions, too, shoulder similar obligations. See, e.g., TEX. LOC.
GOV’T CODE § 381.004 (counties); TEX. HEALTH & SAFETY CODE §§ 262.035 (municipal housing
authorities), 281.051 (county hospital districts), 775.306 (county emergency services districts).
Even boards of regents are commanded to make good-faith efforts in awarding contracts—with
minimum targets—to women- and minority-owned businesses. TEX. EDUC. CODE § 55.03(a).
Likewise, statutory preference for these preferred demographics extends to transportation
authorities and other entities that are typically subject to the DBE framework. See, e.g., TEX.
TRANSP. CODE §§ 22.084 (joint boards for airports), 451.253 (metropolitan rapid transit
authorities), 452.201 (regional transportation authorities); compare TEX. TAX CODE
§ 311.0101(a)–(c) (DBE participation in reinvestment zones), with id. § 311.0101(d) (authorizing
“goals for the participation of minority business enterprises and women-owned business
enterprises in the awarding of state contracts for professional services”).

As with HUB and DBE programs, many minority- and women-owned business
frameworks openly classify beneficiaries by race and sex. 30 Phrases like “minority business,”
“minority-owned business,” or “minority enterprise” consistently refer to a business that is
sufficiently owned and controlled by minority group members. See TEX. EDUC. CODE
§ 55.03(c)(1); TEX. GOV’T CODE §§ 466.107(b)(1)(A), 2306.6734(c)(1); TEX. LOC. GOV’T CODE
§ 381.004(a)(3); TEX. NAT. RES. CODE § 161.131(c)(1); TEX. TRANSP. CODE §§ 451.253(d)(2),
452.201(e)(2). These statutes typically identify the preferred demographics as “blacks” or “African
Americans,” “American Indians,” “Asian Americans,” as well as “Hispanics” or “Mexican
Americans and other Americans of Hispanic origin.” See TEX. EDUC. CODE § 55.03(c)(1); TEX.
GOV’T CODE §§ 466.107(b)(2), 2306.6734(c)(2); TEX. LOC. GOV’T CODE § 381.004(a)(2); TEX.
NAT. RES. CODE § 161.131(c)(2); TEX. TRANSP. CODE §§ 451.253(d)(1), 452.201(e)(1). But see

30
This is true even of the statutes that leave terms like “minority” undefined. Compare TEX. HEALTH &
SAFETY CODE §§ 262.035(b)(6), 281.051(c), 775.306 (all pairing minorities and women), and TEX. GOV’T CODE
§ 466.151(c); TEX. OCC. CODE § 2026.152(b) (all referring to minority businesses alone), with TEX. TAX CODE
§ 311.0101(d); TEX. TRANSP. CODE § 22.084(a) (combining both). An undefined term with “multiple common
meanings . . . is not necessarily ambiguous,” of course, and courts resolve this dilemma by “apply[ing] the definition
most consistent with the context of the statutory scheme.” Sw. Royalties, Inc. v. Hegar, 500 S.W.3d 400, 405 (Tex.
2016). Here, both ordinary usage and context favor construing “minority” as a “member of” a “racial” or “national”
group “regarded as different from the larger group.” THE AMERICAN HERITAGE DICTIONARY OF THE ENGLISH
LANGUAGE 1151 (3d ed. 1992); see also, e.g., Loco Brands, LLC v. Butler Am., LLC, No. 6:18-CV-69-JDK-KNM,
2020 WL 6815167, at *5 (E.D. Tex. Jan. 30, 2020) (explaining that “[m]inority ownership imbues a minority racial
identity to the company itself”), report and recommendation adopted, No. 6:18-CV-69-JDK-KNM, 2020 WL
1536043 (E.D. Tex. Mar. 31, 2020).
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also TEX. LOC. GOV’T CODE § 381.004(a) (also including “Alaska natives”); TEX. TRANSP. CODE
§§ 451.253(d), 452.201(e) (same). Others cater to “women-owned businesses” or “women owned
business enterprises,” see TEX. EDUC. CODE § 55.03(c)(3); TEX. LOC. GOV’T CODE
§ 381.004(a)(4); TEX. NAT. RES. CODE § 161.132(c)(1); TEX. TRANSP. CODE §§ 451.253(d)(3),
452.201(e)(3)—though the intersection between these race- and sex- dependent groups sometimes
proves inconsistent or illogical. See, e.g., TEX. GOV’T CODE § 2306.6734(c)(2)(A) (defining
“minority group” to include “women,” unlike other definitions); TEX. NAT. RES. CODE
§ 161.132(c)(2) (listing racial and ethnic groups to define “minority group,” despite only applying
to a “women-owned business”). A final category takes a unified approach and borrows DBE
language, giving preference to “minority and female-owned small business[es]” under “control[]
by one or more . . . persons” whom “are socially disadvantaged because of their identification as
. . . women, black Americans, Mexican Americans and other Americans of Hispanic origin, Asian
Americans, and American Indians.” TEX. AGRIC. CODE § 12.029(d).

At bottom, these statutory paths to favored treatment in government contracting are
invariably predicated on a person’s inclusion in an enumerated race- or sex-based group.
Distinctions of this nature “are by their very nature odious to a free people whose institutions are
founded upon the doctrine of equality,” Hirabayashi, 320 U.S. at 100, and government-sponsored
priority or benefits for one protected class over another strikes at “the heart of the Constitution’s
guarantee of equal protection,” SFFA, 600 U.S. at 223 (emphasis added) (citation omitted). It
follows that Texas’ preferential approach to minority- and women-owned businesses “engender[s]
a presumption of discriminatory purpose.” Communities for Equity, 459 F.3d at 694; accord, e.g.,
SECSYS, 666 F.3d at 685. This scheme cannot survive the resulting degree of constitutional
scrutiny and, as discussed in further detail below, the “moral imperative of racial [and sex-based]
neutrality” thus demands invalidation. See Bartlett, 556 U.S. at 21 (citation omitted).

ii. Preferential treatment for minority- and women-owned
businesses does not advance a compelling governmental
interest

Statutes authorizing minority- and women-owned business programs rarely contain a
compelling governmental interest. Several aim “to increase the participation of minority and
women-owned businesses in public contracts.” TEX. TRANSP. CODE § 451.253(a); see also id.
§ 452.201 (authorizing programs to increase such participation in regional transportation authority
contracts). These provisions purport no impact on objective procurement or competitive bidding
rules yet provide that “prospective bidders may be required to meet uniform standards designed to
assure a reasonable degree of participation by minority and women-owned business enterprises in
the performance of any contract.” Id. §§ 451.253(c), 452.201(d). Invoking “uniform standards”
cannot save provisions with facially discriminatory purposes. Preferring one group based solely
on race or sex embodies the very “discrimination for its own sake” that “the Constitution forbids.”
SFFA, 600 U.S. at 208–09 (quoting Bakke, 438 U.S. at 306–07).

Other programs mandate that agencies not only collect but report data on their obligatory,
preferential treatment of businesses that meet the preferred demographic requirements. For
example, the Department of Licensing and Regulation must submit legislative and gubernatorial
- Page 43

reports on its equally obligatory “steps” toward advancing the interests and economic opportunities
of minority-owned businesses alone. TEX. GOV’T CODE § 466.107(c); see also id. § 466.107(a)(1)–
(7) (detailing the spectrum of demographic-specific benefits). Boards of regents must also file
reports with the Legislature and Governor detailing the result of their obligatory “good-faith effort”
to steer awards of “contracts relating to the issuance of bonds” toward “minority-owned and
women-owned businesses.” TEX. EDUC. CODE § 55.03(a)(1), (b)(2); see also id. § 55.03(b)(1), (3)
(also requiring that the report include the “total number” of contracts, bids, and proposals that
inform their good-faith obligations). But obligatory accounting that serves only to amplify race-
and sex-based preferences cannot, by its very nature, advance a compelling governmental interest.
See Bakke, 438 U.S. at 307 (deeming a “preferential purpose” of increasing participation through
suspect classifications “facially invalid”).

To be sure, some statutes invoke legitimate governmental interests—like fostering
wholesale economic development. See, e.g., TEX. HEALTH & SAFETY CODE §§ 281.051(c), 775.306
(seeking to “encourage and promote participation by all sectors of the business community”).
Others nonetheless shroud themselves with the pursuit of similar goals and endorse efforts to
“develop and administer” governmental entities’ choice of programs, which can include little more
than “improv[ing] the extent to which women and minority businesses are awarded county
contracts.” TEX. LOC. GOV’T CODE § 381.004(b)(5). Yet the pursuit of “a worthy goal does not”
invite “free[dom] to discriminate on the basis of race [or sex] to achieve” that end any more than
it means these pernicious “classifications should be subject to less exacting scrutiny.” Parents
Involved, 551 U.S. at 701. Still, “the mere recitation of a benign purpose is not an automatic shield
which protects against any inquiry into the actual purposes underlying a statutory scheme,”
Weinberger v. Wiesenfeld, 420 U.S. 636, 648 (1975), and “only two compelling interests . . . permit
resort to” programs that are predicated on a beneficiary’s protected demographic alone:
“remediating specific, identified instances of past discrimination that violated the Constitution or
a statute” and “avoiding imminent and serious risks to human safety in prisons.” SFFA, 600 U.S.
at 207. Furthermore, race- and sex-based programs walk a nonexistent path toward advancing
business interests—highlighting a terminal “mismatch between the means . . . employ[ed] and the
goals” sought. Id. at 217. This offers no assurance that “the means chosen ‘fit’ [a] compelling goal
so closely that there is little or no possibility that the motive for the classification was illegitimate
racial prejudice or stereotype.” Croson, 488 U.S. at 493. As a result, these measures cannot survive
constitutional scrutiny “as to ends” or “means.” Adarand, 515 U.S. at 236.

iii. Aspirational “goals” that act as de facto race- and sex-
based quotas display discriminatory intent and fail
narrow tailoring

Numerical quotas semantically disguised as “goals” also permeate the statutory tapestry
that favors minority- and women-owned businesses. Some authorize overall percentage goals for
minority and women-owned business contracts, TEX. TRANSP. CODE §§ 451.253(a), 452.201(b),
while others permit governmental entities to set contract percentage goals for public contract
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awards to such businesses, TEX. LOC. GOV’T CODE § 381.004(d). 31 Specificity varies. One
provision, for example, permits municipalities to include lease terms subjecting municipal housing
authority lessees “to any goals for hiring and contracting with minorities or women adopted by
and for the municipality.” TEX. HEALTH & SAFETY CODE § 262.035(b)(6). Yet more overtly impose
percentage goals, like requiring housing-tax-credit recipients “to attempt to ensure that at least
[thirty] percent of the construction and management businesses with which the person contracts in
connection with the development are minority-owned businesses.” TEX. GOV’T CODE
§ 2306.6734(a); see also id. § 466.151(c) (stating that the Department of Licensing and Regulation
“shall attempt to license minority businesses as sales agents in at least [twenty] percent of the
licenses issued”).

Percentage goals are especially prevalent in bond-issuance contracts, typically requiring “a
good faith effort” toward two benchmarks. First, for issuance-related contracts, goals target
minority-owned and women-owned businesses relative to total issuance costs. See, e.g., TEX.
EDUC. CODE § 55.03(a)(1) (mandating “at least [twenty-five] percent of the total costs of issuing
those bonds”); TEX. NAT. RES. CODE §§ 161.131(a)(1) (twenty percent), 161.132(a)(1)
(ten percent). Second, for contracts on the items financed by bonds, goals target such businesses
relative to bond proceeds. TEX. EDUC. CODE § 55.03(a)(2) (requiring “at least [twenty-five] percent
of the proceeds of those bonds”); TEX. NAT. RES. CODE §§ 161.131(a)(2) (twenty percent),
161.132(a)(2) (ten percent). Rather than good faith efforts, some bond provisions mandate that
governmental entities “shall attempt” to include a certain percentage of such businesses in bond
issuance. See, e.g., TEX. GOV’T CODE § 1232.104(c)(1) (requiring the Texas Public Finance
Authority to “include minority-owned businesses in the issuance and underwriting of at least
[twenty] percent of the obligations issued under this section”), (2) (requiring “at least [ten] percent”
for women-owned businesses); TEX. TAX CODE § 351.1065(c) (requiring municipalities expending
hotel occupancy tax revenues to “attempt to include minority-owned businesses in the issuance of
at least [thirty-two] percent of the total dollar value of the bonds issued, and in at least [thirty-two]
percent of the total fees paid by the issuer, in connection with the construction”).

Yet these numerical mandates, even when hedged with aspirational language like “good
faith effort” or “shall attempt,” betray an unyielding commitment to racial and sex-based sorting.
A quota disguised as a “goal” is no less “undeniably a [demographic] classification” and, as such,
any “semantic distinction is beside the point.” Bakke, 438 U.S. at 289; see also, e.g., W.H. Scott
Const., 199 F.3d at 215 (describing these labels as constitutionally “irrelevant”); Bras, 59 F.3d at
31
A previous attorney general opinion directly addressed the constitutionality of Section 381.004 in light of
the Supreme Court’s holding in Croson. See Tex. Att’y Gen. Op. No. DM-226 (1993) at 3. That opinion correctly
observed “a majority of justices appears to have agreed that a plan of a governmental body to apportion opportunities
on the basis of race is subject to strict scrutiny.” Id. But the opinion went on to state that “Section 381.004 of the Local
Government Code does not apportion county contracting opportunities on the basis of race” and, without engaging
any degree of constitutional scrutiny, concluded “we do not believe that section 381.004 violates the fourteenth
amendment.” Id. Subsequent precedent has since addressed what should have been obvious at the time: “[L]aws that
classify on the basis of race, alienage, or national origin trigger strict scrutiny.” Skrmetti, 605 U.S. at 510; accord
Virdi, 135 F. App’x at 267 (holding “strict scrutiny applies to all racial classifications, not just those creating binding
racial preferences,” like “set-asides or mandatory quotas”). DM-226 is thus overruled to the extent it can be read to
validate Section 381.004 of the Local Government Code.
- Page 45

874–75 (emphasizing “the economic realities . . . rather than the label” and holding statutory
preferences were not “immunized from scrutiny because they purport to establish goals rather than
quotas”). Public institutions may not erect racial or sex-based quotas. See SFFA, 600 U.S. at 209.
Nor may they divert favored groups onto privileged tracks for government largesse, shield them
from competition, or rationalize unequal treatment in pursuit of predetermined group allotments.
Grutter, 539 U.S. at 334, 329–30. Minority- and women-owned business frameworks that act as
“a set-aside program” unquestionably injure nonqualifying competitors due to their “inability to
compete on an equal footing in the bidding process,” Ne. Fla. Chapter of Associated Gen.
Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 666 (1993), and “the imposition of special
disabilities upon members of a particular [group] because of their [immutable characteristics]
would seem to ‘violate a basic concept of our system’” in that “legal burdens should bear some
relationship to individual responsibility.” Frontiero v. Richardson, 411 U.S. 677, 686 (1973)
(plurality op.) (citation omitted). Taken together, these failings prove too great to overcome on a
foundation that is insufficiently compelling or tailored.

iv. These programs grant minority- and women-owned
businesses preferential treatment in contracting, direct
assistance, and other forms of targeted outreach

Beyond quotas, these provisions confer a range of benefits to minority- and women-owned
businesses. Some explicitly authorize preferential treatment in contracting and procurement. The
Government Code, for example, requires the Department of Licensing and Regulation, as well as
lottery operators, to “take positive steps” toward awarding contracts for equipment or supplies,
service contracts, and sales agent licenses to minority businesses alone. TEX. GOV’T CODE
§ 466.107(a)(3)–(5). Such efforts extend to requiring prime contractors to favor minority business
subcontractors. See id. § 466.107(a)(7) (requiring positive steps to “require all bidders or
contractors, when appropriate, to include specific plans or arrangements to use subcontracts with
minority businesses”). Where, as here, a program involves “a process where applicants compete
for a limited pool of spots, a tip for one race necessarily works as a penalty against other races.”
SFFA, 600 U.S. at 294 (Gorsuch, J., concurring) (cleaned up).

Agencies also provide targeted information and direct assistance to minority- and women-
owned businesses. The Department of Agriculture, for example, assists minority- and female-
owned small businesses in bidding for department contracts and open market purchases. TEX.
AGRIC. CODE § 12.029(a). Metropolitan rapid transit and regional transportation authorities also
assist such businesses in their service areas to boost participation in public contracts awarded by
the relevant authority. TEX. TRANSP. CODE §§ 451.253(a), 452.201(a). Yet distributing benefits or
burdens by race or sex fails strict scrutiny. See Parents Involved, 551 U.S. at 720 (applying federal
equal protection to programs disbursing race-based benefits and burdens).

Other programs funnel influence, opportunities, and encouragement to minority- or
women-owned businesses. The Racing Commission, for instance, must “attempt to ensure the
involvement of minority-owned businesses” when approving “a concession, management, or
totalisator contract.” TEX. OCC. CODE § 2026.152(b). Joint airport boards may implement rules
creating “contracting opportunities for minority- and women-owned businesses,” which bind
- Page 46

constituent agencies and nonprofit airport facility financing corporations. TEX. TRANSP. CODE
§ 22.084(a). And metropolitan rapid transit authority boards must “establish a program to
encourage participation in contracts of the authority by businesses owned by minorities or
disadvantaged individuals.” Id. § 451.252(a). All of these unjustified racial preferences violate the
constitutional guarantee of equality. See Croson, 488 U.S. at 511 (holding that a city’s “treatment
of its citizens on a racial basis violates” equal protection due to the city’s failure “to identify the
need for remedial action in the awarding of its public construction contracts”).

v. Advantaging nonprofit organizations because they are
managed by women and members of racial minorities
also violates constitutional equality guarantees

It also merits pause to address a separate scheme that authorizes preferences for nonprofits
managed by women and racial minorities, extending race- and sex-based discrimination into the
nonprofit realm. For the reasons already stated, such classifications offend equal rights principles
no less than in for-profit contexts. But the relevant Human Resources Code provision violates the
U.S. and Texas Constitutions for an additional reason.

Chapter 122 of the Human Resources Code—entitled “Purchasing from People with
Disabilities”—nobly aims to foster disabled individuals’ independence through employment while
ensuring compliance “with requirements of nondiscrimination and affirmative action in
employment matters related to persons with disabilities.” TEX. HUM. RES. CODE § 122.001. The
Workforce Commission contracts with central nonprofit agencies for services, including recruiting
and assisting nonprofits managed by racial minorities and women to qualify as community
rehabilitation programs. Id. § 122.019(a)(5).

This framework implies that women and certain racial groups are somehow inherently
disabled, thereby “reinforc[ing] common stereotypes holding that certain groups are unable to
achieve success without special protection based on a factor having no relationship to individual
worth.” Bakke, 438 U.S. at 298; see also TEX. HUM. RES. CODE § 122.002(5) (defining
“[d]isability” for purposes of Chapter 122 as “a mental or physical impairment[] . . . that impedes
a person who is seeking, entering, or maintaining gainful employment”). Regardless of the
provision’s intent, courts “may not accept as a defense to racial discrimination the very stereotype
the law condemns.” Powers v. Ohio, 499 U.S. 400, 410 (1991).

4. Appointment and employment preferences also prove
unconstitutional

Another class of statutes impermissibly categorizes individuals by race and sex in
appointed positions and employment. Some require consideration of these immutable traits in
valuable government appointments to state boards, commissions, committees, and advisory
bodies, triggering and failing strict scrutiny. See infra Part II.A.4.i. Other statutory schemes prove
constitutionally problematic by advantaging applicants based on race and sex in seeking
employment with state agencies. See infra Part II.A.4.ii. Finally, Texas law likewise requires
electrical and telecommunications utilities to consider race and sex in recruiting and hiring—again
- Page 47

triggering and failing strict scrutiny. See infra Part II.A.4.iii. Our constitutional foundation forbids
any government actor from considering a candidate’s race or sex in determining their suitability
for public service.

i. Consideration of race and sex in government
appointments triggers and fails strict scrutiny

Texas law sometimes mandates consideration of race and sex in appointments to
competitive, valuable positions on state boards, commissions, and advisory bodies. Somewhat
ironically, these same statutes often bar such considerations in the same breath. Consider, for
example, appointments to the Texas Facilities Commission. The Governor and Lieutenant
Governor are instructed that:

(a) Appointments to the commission shall be made without regard to the race,
color, disability, sex, religion, age, or national origin of the appointees.

(b) In making appointments under this section, the governor and lieutenant
governor shall attempt to appoint women and members of different minority
groups, including African Americans, Hispanic Americans, Native Americans, and
Asian Americans.

TEX. GOV’T CODE § 2152.052.

The term “shall” in subsection 2152.052(b) mandates that the Governor and Lieutenant
Governor “attempt” to fill vacancies with women and racial minorities. See Albertson’s, Inc. v.
Sinclair, 984 S.W.2d 958, 961 (Tex. 1999) (per curiam) (“We generally construe the word ‘shall’
as mandatory, unless legislative intent suggests otherwise.”); ANTONIN SCALIA & BRYAN A.
GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 114 (2012) (explaining that “when
the word ‘shall’ can reasonably be read as mandatory, it ought to be so read”). At least three other
statutes governing appointments impose the same discriminatory mandate in materially identical
terms. See, e.g., TEX. OCC. CODE § 252.001(c) (State Board of Dental Examiners); TEX. HEALTH
& SAFETY CODE §§ 103.002(b-1) (Texas Diabetes Council), 93.002(b) (Council on Cardiovascular
Disease and Stroke).

Government appointments, including those referenced above, are inherently “zero-sum.”
SFFA, 600 U.S. at 218. A finite number of spots are available, and each vacancy yields only one
appointee. See, e.g., TEX. GOV’T CODE § 2152.051(a) (providing that the Texas Facilities
Commission is composed of only seven members). This means that “[a] benefit provided to some
applicants but not to others necessarily advantages the former group at the expense of the latter.”
SFFA, 600 U.S. at 219. To the degree race or sex are positive factors for some candidates, these
factors are necessarily negative attributes for candidates who lack these immutable traits. See id.
at 218 (“How else but ‘negative’ can race [or sex] be described if, in its absence, members of some
racial [or gender] groups would be admitted in greater numbers than they otherwise would have
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been?”). In short, these appointment statutes tip the scales for women over men and some races
over others—triggering strict scrutiny. 32 See id. at 206.

Other appointment statutes utilize race and sex differently but no more lawfully. Some
demand racial or sex-based balancing so that commission or board membership mirrors state
demographics, imposing de facto quotas for women and minorities. See TEX. GOV’T CODE
§ 651.009(a) (“In each case in which the governing body of a state board, commission, or other
state agency that has statewide jurisdiction is appointed by the governor or another appointing
authority, the governor or appointing authority shall ensure that, to the extent possible, the
membership of the governing body reflects the racial, ethnic, and geographic diversity of this
state.”); see also, e.g., TEX. FAM. CODE § 264.502(d) (requiring members of the child fatality
review team committee to “reflect the geographical, cultural, racial, and ethnic diversity of the
state”); TEX. GOV’T CODE §§ 403.503(d) (requiring the membership of the Texas opioid abatement
fund council to “reflect[], to the extent possible, the ethnic and geographic diversity of this
state”), 2166.404(c) (requiring appointments to the Industry Advisory Committee on xeriscape to
“reflect this state’s gender and ethnic diversity”), 2306.027(b) (requiring that board appointments
“must broadly reflect the geographic, economic, cultural, and social diversity of the state, including
ethnic minorities, persons with disabilities, and women”); TEX. HEALTH & SAFETY CODE
§ 34.002(c)(3) (requiring that the composition of the Texas Maternal Mortality and Morbidity
Review Committee “reflects the racial, ethnic, and linguistic diversity of the state”); TEX. HUM.
RES. CODE § 40.022 (providing that “[n]otwithstanding” the requirement that appointments to the
Family and Protective Services Council “be made without regard to the race, color, disability, sex,
religion, age, or national origin of the appointees,” such “appointments to the council must reflect
the ethnic diversity of this state”); TEX. OCC. CODE § 2022.001 (requiring that the Governor
“attempt to reflect the minority groups found in the state’s general populace” when making
appointments to the Texas Racing Commission). Such arrangements are common on the local level
as well. 33 See, e.g., TEX. EDUC. CODE § 12.015(b) (“The membership of the charter commission

32
Notably, the Governor or Lieutenant Governor cannot simultaneously obey subsection (a) and (b) of
Section 2152.052. Subsection (a) forbids considering race and sex, while subsection (b) demands it. See TEX. GOV’T
CODE § 2152.052. As such, if subsection (b) were to survive strict scrutiny, both subsections (a) and (b) should be
denied any effect. See SCALIA & GARNER, supra, at 189 (explaining that “when reconciliation of conflicting provisions
cannot reasonably be achieved, the proper resolution is to apply the unintelligibility cannon (§ 16) and to deny effect
to both provisions”); see also id. (where no “valid choice between two differing interpretations” exists, courts “are left
with the consequence that a text means nothing in particular at all” (quoting E.D. HIRSCH, VALIDITY IN
INTERPRETATION 251 (1967))). This outcome may seem harsh, “especially when the matter covered by the
contradictory provisions is central to the document or statute in question.” Id. at 190. But subsection (b) is unlawful,
while subsection (a) merely echoes independent demands of the Texas and U.S. Constitutions. See, e.g., U.S. CONST.
amend. XIV, § 1; TEX. CONST. art. I, § 3a. The same contradictory commands can be found in Occupations Code
subsection 252.001(c) as well as Health & Safety Code subsections 93.002(b) and 103.002(b-1)—implicating the
unintelligibility cannon once more. See SCALIA & GARNER, supra, at 189.
33
Sections 2308.255 and 2308.256 of the Government Code are noteworthy as well. See TEX. GOV’T CODE
§§ 2308.255(b)(2) (requiring that board appointments “reflect the ethnic and geographic diversity of the workforce
development area”), .256 (requiring that local workforce development boards must “reasonably represent the
industrial and demographic composition of the business community” and that at least one-half of the representatives
(continued…)
- Page 49

must reflect the racial, ethnic, socioeconomic, and geographic diversity of the district.”); TEX.
HEALTH & SAFETY CODE §§ 534.004(b) (requiring that those appointing a community center’s
board of trustees must “attempt to reflect the ethnic and geographic diversity of the local service
area the community center serves”), 672.002(g) (requiring that certain members selected to serve
on a fatality review team “must reflect the geographical, cultural, racial, ethnic, and gender
diversity of the county or counties represented”); TEX. LOC. GOV’T CODE § 318.003(a) (requiring
that county historical commission members “be individuals who broadly reflect the age, ethnic,
and geographic diversity of the county”).

To satisfy these statutes, appointers must parse state demographic data, assign numerical
values to various minority populations, and make appointments to roughly correspond with (or
“broadly reflect”) those percentages. But the Supreme Court has made clear that race- and sex-
based “balancing’” and “quota system[s]” are “patently unconstitutional.” SFFA, 600 U.S. at 307
(Gorsuch, J., concurring) (quoting Grutter, 539 U.S. at 330, 334). “[W]hat cannot be done directly
cannot be done indirectly,” id. at 230–31, and the Legislature cannot establish a hazy quota system
or require governmental bodies to “broadly reflect” the minority populations of Texas—a
euphemism for approximate statistical balancing. “The Constitution deals with substance, not
shadows, and the prohibition against racial [and sex-based] discrimination is levelled at the thing,
not the name.” Id. (internal quotations omitted) (quoting Cummings v. Missouri, 71 U.S. (4 Wall.)
277, 325 (1866)); see also Ricci v. DeStefano, 557 U.S. 557, 581–82 (2009) (explaining that a de
facto quota system is one in which a “focus on statistics . . . could put undue pressure on employers
to adopt inappropriate prophylactic measures”).

Other appointment statutes operate still differently, reserving board and committee seats
for individuals “representing the interests of” HUBs or minority groups. See, e.g., TEX. GOV’T
CODE §§ 447.004(b-2)(6) (reserving state energy conservation office advisory committee seat for
“one individual representing the interests of historically underutilized businesses”),
2166.305(b)(6)–(7) (reserving one seat on a committee appointed by the Texas Facilities
Commission for an individual representing HUB interests and two seats for individuals
representing minority contractors association interests); TEX. OCC. CODE § 1305.051(b)(4)
(reserving one electrical safety and licensing advisory board seat for an individual “affiliated” with
a HUB). Under these statutes, any candidate may qualify regardless of that individual’s race or
sex, but only to advocate for groups defined by these same immutable characteristics. 34 See, e.g.,
TEX. GOV’T CODE § 2166.305(b)(7). But the Legislature cannot sanitize discrimination by shifting
it from the individual appointee to a group that the appointee is to represent. Again, “what cannot
be done directly cannot be done indirectly.” SFFA, 600 U.S. at 230.

must be small businesses, “including minority businesses” (emphases added)). An opinion from a previous attorney
general determined that persons outside the relevant service area are “not, for that reason alone, ineligible to serve as
a private-sector representative on the board.” See Tex. Att’y Gen. Op. No. JC-0298 (2000) at 5. Yet nothing in that
opinion supports the notion that these provisions’ racial preferences are constitutional.
34
See supra Parts II.A.1 (discussing the race- and sex-based qualifications for HUB status), II.A.3 (examining
the meaning of the term “minority” in statutes favoring minority-owned businesses).
- Page 50

Such schemes also rest on a core fallacy: A statute reserving a committee, board, or
commission seat for someone “representing” the interests of a minority group “reinforces the
perception that members of the same racial group” invariably “think alike” and “share the same
political interests.” Shaw, 509 U.S. at 647. The Supreme Court has repeatedly “rejected such
perceptions . . . as impermissible racial stereotypes.” Id. That odious misconception “seems based
on the demeaning notion that members of the defined racial groups ascribe to certain ‘minority
views’ that must be different from those of other citizens.” Metro Broad., 497 U.S. at 636
(Kennedy, J., dissenting). Texas law cannot lawfully “signal” to those holding committee, board,
or commission seats that “they represent a particular . . . group” over the general population. Shaw,
509 U.S. at 647.

None of the appointment statutes discussed above could survive strict scrutiny. To start,
they offer no justification for racial or sex-based preferences. The Supreme Court has approved
only two compelling interests for racial distinctions outside the context of higher education, 35 and
only one could plausibly be relevant here: “remediating specific, identified instances of past
discrimination that violated the Constitution or a statute.” SFFA, 600 U.S. at 207. But establishing
this interest is a heavy burden. The government must provide a strong basis in evidence
demonstrating discrimination in violation of some positive law. See Skrmetti, 605 U.S. at 554
(Barrett, J., concurring) (“For purposes of the Fourteenth Amendment, the relevant question is
whether the group has been subject to a longstanding pattern of discrimination in the law.”).

This pattern must be supported by particularized evidentiary findings. SFFA, 600 U.S. at
258 (Thomas, J., concurring). And this showing must be made before the statute imposing the
racial or sex-based classification is enacted. Shaw, 517 U.S. at 910 (explaining that “the institution
that makes the racial distinction must have had a ‘strong basis in evidence’ to conclude that the
remedial action was necessary, ‘before it embarks on an affirmative-action program’” (quoting
Wygant, 476 U.S. at 277)); Wis. Legislature v. Wis. Elections Comn’n, 595 U.S. 398, 404 (2022)
(same). What’s more, it is “well settled” that the government “must justify” such remedial efforts
“with a showing of past discrimination by the governmental unit” that seeks to use the sex- or
“race-conscious remedy.” Dean v. City of Shreveport, 438 F.3d 448, 454 (5th Cir. 2006) (emphasis
added); accord Wygant, 476 U.S. at 274 (same). So here, race- or sex-based preferences in
appointments demand a showing of identifiable instances of past discrimination in appointments
to the relevant commission, board, or committee. See Dean, 438 F.3d at 454. Nothing suggests the
Legislature relied on such evidence when enacting these statutes. In fact, many of these race- and
sex- based preferences were enacted when the relevant committees, councils, or commissions were
first created. See, e.g., TEX. FAM. CODE § 264.502(d); TEX. GOV’T CODE §§ 403.503(d),
447.004(b-2)(6), 2166.404(c); TEX. HEALTH & SAFETY CODE §§ 34.002(c)(3), 672.002(g); TEX.
HUM. RES. CODE § 40.022; TEX. EDUC. CODE § 12.015(b); TEX. OCC. CODE § 1305.051(b)(4).

These provisions also fail the demands of narrow tailoring. As the Supreme Court has
repeatedly instructed, “[r]acial classifications are simply too pernicious to permit any but the most

35
Even in the context of higher education, whatever extent achieving “diversity” remains a compelling
interest is betrayed by the reality that it evades any sense of legitimate tailoring. See SFFA, 600 U.S. at 218–25.
- Page 51

exact connection between justification and classification.” SFFA, 600 U.S. at 217 (quoting Gratz,
539 U.S. at 270). And to survive narrow tailoring, the racial classification must not be under- or
over-inclusive. Nuziard, 721 F. Supp. 3d at 480. “An underinclusive presumption excludes groups
necessary to further the identified interest; an overinclusive presumption includes groups
unnecessary for that interest.” Id. Consider the Government Code provision that controls
appointments to the Texas Facilities Commission. TEX. GOV’T CODE § 2152.052(b). It requires
that the appointer “attempt to appoint women and members of different minority groups, including
African Americans, Hispanic Americans, Native Americans, and Asian Americans.” Id. The term
“including,” which precedes a list of racial minorities, indicates that the appointer must attempt to
appoint members of any “minority group”—not just those listed in the statute. SCALIA & GARNER,
supra, at 32 (explaining that the term “include,” “does not ordinarily introduce an exhaustive list”).
And because the listed examples are racial, the associated-words canon limits the term “minority”
to racial minorities. Id. at 195 (providing that when several words “are associated in a context
suggesting that the words have something in common, they should be assigned a permissible
meaning that makes them similar”); see also Fischer v. United States, 603 U.S. 480, 487 (2024)
(“[T]he canon of noscitur a sociis teaches that a word is ‘given more precise content by the
neighboring words with which it is associated.’” (quoting United States v. Williams, 553 U.S. 285,
294 (2008))). In effect, this statute embodies a preference for women over men and for any racial
“minority” group—regardless of that group’s history of discrimination in Facilities Commission
appointments. 36 Casting so wide a net proves overinclusive and could not possibly serve to
remediate specific instances of past discrimination. 37 See Nuziard, 721 F. Supp. 3d at 480.

Moreover, “race may never be used as a ‘negative’ and . . . may not operate as a stereotype.”
Id. (quoting SFFA, 600 U.S. at 218). In other words, the point of the preference cannot be that
“there is an inherent benefit in race qua race—race for race’s sake.” SFFA, 600 U.S. at 220.
Government actors may not intentionally allocate preferences to those “‘who may have little in
common with one another but the color of their skin.” Shaw, 509 U.S. at 647. Yet here, many of
these statutes can be satisfied by appointments of individuals of any minority race—presumably
any race besides white. If that will do, these statutes assume that there is a “benefit in race qua
race—race for its own sake”—in mandating racial representation unmoored from any past instance
of discrimination. SFFA, 600 U.S. at 220.
It bears repeating once more that “[e]liminating racial discrimination means eliminating all
of it,” id. at 206, and all government-imposed racial classifications must have a “logical endpoint.”
See Nuziard, 721 F. Supp. 3d at 493–94. As explained in SFFA, the Supreme Court was only
“willing to dispense temporarily with the Constitution’s unambiguous guarantee of equal
protection” in Grutter and its progeny because of a promised sunset. SFFA, 600 U.S. at 212.
Indeed, Grutter itself recognized that “[e]nshrining a permanent justification for racial preferences
would offend this fundamental equal protection principle.” 539 U.S. at 342. And as the Fifth

36
The U.S. Supreme Court has already determined that two of these terms are “imprecise,” “overbroad,” and
“arbitrary.” SFFA, 600 U.S. at 217 (explaining that the term “Asian” is “plainly overbroad,” and the term “Hispanic”
is arbitrary without definition).
37
The same over-inclusive list of preferred categories can be found elsewhere. See, e.g., TEX. OCC. CODE
§ 252.001(c); TEX. HEALTH & SAFETY CODE §§ 93.002(b), 103.002(b-1).
- Page 52

Circuit has emphasized, the “central theme of a duration analysis is that the shorter the lifespan of
the remedy, the more likely it is narrowly tailored.” Dean, 438 F.3d at 460. But none of these
appointment statutes have endpoints, logical or otherwise.

In sum, none of these appointment statutes can survive the daunting strict-scrutiny inquiry.
State actors may weigh factors like “economic” and “cultural” diversity in appointments, TEX.
GOV’T CODE § 2306.027(b), but they cannot lawfully prefer one sex or race over others in
appointments to commissions, boards, advisory bodies, or any other government post. 38

ii. Consideration of race in state-agency employment
triggers and fails strict scrutiny

The Constitution likewise proscribes race- or sex-based preferences in public employment,
yet several statutes purport to require just that. For example, the Texas Department of
Transportation must designate a “central authority to set and monitor women and minority hiring
goals.” TEX. TRANSP. CODE § 201.403(b). The statute defines minority by race, to include “African
Americans, Hispanic Americans, Asian Americans, Alaska natives, and Pacific Islanders.” Id.
§ 201.403(d). As before, this racial classification both invites and fails strict scrutiny. See, e.g.,
SFFA, 600 U.S. at 206 (explaining that all racial classifications are subject to strict scrutiny).
Similarly, the Department of Public Safety must “place an emphasis on minority recruiting and
hiring efforts for noncommissioned positions.” 39 TEX. GOV’T CODE § 411.0076(a). This

38
Recently, lawsuits across the nation have assailed such schemes. See, e.g., Do No Harm v. Sanders, No.
4:25-cv-00282-LPR (E.D. Ark. Mar. 25, 2025) (challenging race qualifications for occupational therapist committee
and counseling board); Haile v. Hutchinson, No. 4:23-cv-00005-KGB (E.D. Ark. Jan. 4, 2023) (challenging social
work licensing board race quota); Do No Harm v. Lee, No. 3:23-cv-01175, 2024 WL 3730623, at *1 (M.D. Tenn.
Aug. 8, 2024) (challenging mandate to “strive to ensure” board of podiatric medical examiners includes “a member
of a racial minority”); Am. All. for Equal Rts. v. Walz, No. 0:24-cv-017848 (D. Min. May 15, 2024) (challenging social
work board’s race quota); Do No Harm v. Gianforte, No. 6:24-CV-00024-BMM-KLD, 2025 WL 399753, at *1 (D.
Mont. Feb. 5, 2025) (challenging gender and racial balance for state boards, commissions, committees, and councils),
Am. All. for Equal Rts. v. Ivey, No. 2:24-cv-104-RAH, 2024 WL 1181451, at *1 (M.D. Ala. Mar. 19, 2024)
(challenging real estate board race quota); Do No Harm v. Edwards, No. 24-16, 2025 WL 3111601, at *1 (W.D. La.
Sept. 29, 2025) (challenging medical board race quota); Chiong v. McMaster, No. 3:24-cv-7213-SAL (D. S.C. Dec.
11, 2024) (challenging minority affairs commission race quota); Miall v. City of Asheville, No. 1:23-cv-00259-MR-
WCM, 2025 WL 3492825, at *1 (W.D.N.C. Dec. 2, 2025) (challenging city advisory board racial qualification);
Hurley v. Gast, 711 F. Supp. 3d 1069, 1082 (S.D. Iowa 2024) (invalidating judicial nominating commission sex-based
quota). But many have been rendered moot, dismissed, or ended with consent decrees after legislative solutions were
implemented or plaintiffs received guarantees that protected characteristics would not bear on the appointment
process. See, e.g., H.B. 1365 (Act 938), 95th Gen. Assemb., Reg. Sess. (Ark. 2025); S.B. 264 (Act 254), 94th Gen.
Assemb., Reg. Sess. (Ark. 2023); H.B. 1237, 114th Gen. Assemb. Reg. Sess. (Tenn. 2025); S.B. 1084, 114th Gen.
Assemb., Reg. Sess. (Tenn. 2025); H.B. 215, 69th Leg., Reg. Sess. (Mont. 2025); S.B. 214 (Act 56), 126th Gen.
Assemb., Reg. Sess. (S.C. 2025); S.F. 2096, 90th Gen. Assemb., Reg. Sess. (Iowa 2024); Miall, 2025 WL 3492825,
at *1 (stating that the parties entered a consent decree to amend and “administer the ordinance without regard to ‘race,
ethnicity, color, or national origin’”).
39
Provisions sometimes focus recruitment efforts based on racial or sex-based “diversity” as well. See TEX.
GOV’T CODE § 72.041 (“The judges of the supreme court, court of criminal appeals, and courts of appeals shall
encourage the recruitment of judicial law clerks and staff attorneys that reflect the gender, racial, and ethnic diversity
of this state.”).
- Page 53

“emphasis” again triggers strict scrutiny. See SFFA, 600 U.S. at 218. And blanket preferences for
all minorities are over-inclusive, see Nuziard, 721 F. Supp. 3d at 480, even assuming the entire
Department was the relevant “government unit” that engaged in specific instances of past
discrimination. See Dean, 438 F.3d at 460. Narrow tailoring therefore dooms this statutory scheme.

Sections 21.501 and 21.502 of the Labor Code fare no better. Under those provisions, each
state agency must “analyze its current workforce and compare the number of African Americans,
Hispanic Americans, and females employed by the agency in each job category to the available
African Americans, Hispanic Americans, and females in the statewide civilian workforce to
determine the percentage of exclusion or underutilization in each job category.” TEX. LAB. CODE
§ 21.501. And failure to achieve the required race- and sex-based demographics triggers
administrative burdens. If, based on the workforce analysis, an agency is underutilizing any of the
statutorily preferred groups (Hispanic Americans, African Americans, and women) in any single
job category relative to the “civilian workforce,” then the agency must “develop and implement a
plan to recruit qualified African Americans, Hispanic Americans, and females.” Id. § 21.502. In
other words, state agencies must engage in race- and sex-based balancing to mirror state
demographics. This is the very balancing that the Supreme Court has repeatedly rejected. See, e.g.,
Parents Involved, 551 U.S. at 732 (“Racial balancing is not transformed from ‘patently
unconstitutional’ to a compelling state interest simply be relabeling it ‘racial diversity.’”).

Race- and sex-conscious recruitment demands strict scrutiny, and outreach or recruitment
schemes employing suspect classifications fail if they confer advantages based on race or sex.
Connerly v. State Pers. Bd., 92 Cal. App. 4th 16, 46 (2001); see also Hi-Voltage Wire Works, Inc.
v. City of San Jose, 24 Cal. 4th 537, 562 (2000) (holding a city’s “race- and sex-conscious outreach”
program unconstitutional because it “effectively provides an advantage to members of the targeted
groups”); Safeco Ins. Co. of Am. v. City of White House, 191 F.3d 675, 692 (6th Cir. 1999) (holding
that outreach requirements trigger strict scrutiny “where their administration ‘indisputably
pressures’ contractors to hire minority subcontractors”). Not only do these Labor Code provisions
demand race and sex-conscious recruiting but they apply to all state agencies, without reference
to any specific episode of past discrimination. See TEX. LAB. CODE §§ 21.501, .502. Again, when
a governmental entity uses sex- or race-conscious measures to remedy its own past discrimination,
it must point to specific acts of discrimination by the particular “government unit seeking to use
the [demographic]-conscious remedy.” Dean, 438 F.3d at 454 (emphasis added). And the whole of
Texas government cannot possibly be the relevant “government unit” for this analysis, see id., so
Sections 21.501 and 21.502 serve no valid governmental interest.

iii. Consideration of race and sex in employment with public
and private utilities triggers and fails strict scrutiny

State law likewise compels certain utilities to pursue workforce diversity goals through
programs, activities, and initiatives—regardless of any showing of past discrimination based on
race or sex. For example, the Utilities Code previously required that every electrical and
telecommunications utility submit to the Public Utilities Commission “a comprehensive five-year
plan to enhance the diversity of its workforce in all occupational categories and to increase
contracting opportunities for small and historically underutilized businesses.” TEX. UTIL. CODE
- Page 54

§§ 39.909(b) (electrical utilities), 52.256(b) (telecommunications utilities). These plans were to
include the utility’s current and historical benchmarks for workforce diversity, initiatives to
improve those metrics, a listing of “programs and activities” that the utility would undertake to
achieve those goals, and similar efforts to contract with more HUBs. Id. This meant that whatever
the metrics for workforce diversity revealed (the then-current and historical data), utilities had to
formulate detailed plans to improve those numbers. Id. That belies any constitutional tailoring.
Even were we to assume these efforts were necessary to remedy specific instances of past
discrimination, reflexively demanding more diversity for every entity in an entire industry—
regardless of actual hiring practices or current demographic makeup—is anything but a
constitutionally tailored pursuit of that end.

The demand for these five-year plans has been satisfied for nearly a quarter century and
yet the Utilities Code still saddles utilities with continuing obligations to increase diversity hiring.
Electrical and telecommunications utilities remain statutorily obligated to provide annual reporting
that operates in the same way as the initial five-year plans: 40 detailing “its efforts to improve
workforce diversity and contracting opportunities for small and historically underutilized
businesses,” despite what the numbers revealed in the initial five-year plan and regardless of any
increased “diversity” that has been achieved since. See id. §§ 39.909(c), 52.256(c). These
provisions also require the utility to explain what “progress” it has made in enhancing workforce
diversity during the previous year in addition to detailing the “initiatives, programs, and activities”
the utility will pursue the next year, both to “increase the diversity of its workforce” and contracting
opportunities for HUBs. See id. §§ 39.909(c)(3)–(7), 52.256(c)(3)–(7). That is to say the pursuit
of diversity is a one-way, statutory ratchet. No matter what, utilities are commanded to keep
creating “initiatives, programs, and activities” that “increase the diversity” of their workforces.
See id. (emphasis added).

These provisions leave “workforce diversity” undefined, so the term should be read in
context and consistent with its ordinary meaning. Tex. Health & Hum. Servs. Comm’n v. Est. of
Burt, 689 S.W.3d 274, 280–81 (Tex. 2024). Contemporary dictionaries offer little help; the term
“diversity” is quite broad without more useful context. 41 But given the statutory scheme and the
plain meaning of the term in context, “workforce diversity” likely includes racial and gender

40
Data collection alone poses no constitutional harm. See, e.g., Dep’t of Com. v. New York, 588 U.S. 752,
760 (2019) (noting that the census has historically collected racial data). But when the state pressures governmental
or non-governmental entities to configure their workforces along racial or sex-based demographics, strict scrutiny is
triggered. See SFFA, 600 U.S. at 218. Governments cannot enact such preferences, nor command public or private
utilities to do so, without advancing a compelling interest through narrowly tailored means.
41
The term “diversity” means “the fact or quality of being diverse” and “diverse” means to be “[m]ade up of
distinct characteristics, qualities, or elements.” THE AMERICAN HERITAGE COLLEGE DICTIONARY 405 (3d ed. 1997);
see also, e.g., MERRIAM-WEBSTER’S COLLEGIATE DICTIONARY 339 (10th ed. 1993) (defining “diverse” as “differing
from one another”); NEW OXFORD AMERICAN DICTIONARY 498 (1st ed. 2001) (defining “diverse” as “showing a great
deal of variety”). “Workforce” means “[a]ll the people working or available to work, as in a nation or a company.”
THE AMERICAN HERITAGE COLLEGE DICTIONARY 1554 (3d ed. 1997); see also, e.g., MERRIAM-WEBSTER’S
COLLEGIATE DICTIONARY 1363 (10th ed. 1993) (defining “workforce” as “the workers engaged in a specific activity
or enterprise”); NEW OXFORD AMERICAN DICTIONARY 1944 (1st ed. 2001) (defining “workforce” as “the people
engaged in or available for work, either in a country or area or in a particular company or industry”).
- Page 55

diversity. This meaning is likewise borne out by the actual reports submitted by utilities, which
uniformly focus on race- and sex-based demographics. 42 To whatever extent a workforce is
deemed less “diverse” under Sections 39.909 and 52.256 due to excess white (or male) employees,
with remediation only possible by favoring women or non-white minorities in hiring or promotion,
these statutes trigger and fail strict scrutiny.

5. Other programs likewise prove unconstitutional
Beyond contracting, procurement, government appointments, and employment, Texas
statutes also embed race- and sex-conscious preferences throughout higher education, public parks
funding, and economic development initiatives. In education, provisions mandating partnerships
between underperforming high schools and institutions of higher education to boost Hispanic and
African American male enrollments openly advance a discriminatory purpose without remedying
any specific instance of past discrimination. See infra Part II.A.5.i. Parks-funding statutes are
likewise facially discriminatory insofar as they prioritize funding to “underserved populations,” a
term defined to include racial minorities and females. See infra Part II.A.5.ii. Finally, economic
development schemes that condition project approvals and benefits on commitments to hire
minority workers and contract with minority-owned businesses impose racial classifications
untethered to government-unit-specific harms. See infra Part II.A.5.iii. Collectively, these
provisions constitute discrimination for its own sake—failing strict scrutiny.

i. Race- and sex-conscious higher-education programs fail
strict scrutiny
Section 51.810 of the Education Code requires public high schools with substandard
college enrollment figures to partner with the nearest “institution of higher education” and develop
a plan for improving their statistical results. TEX. EDUC. CODE § 51.810(b); see also id. § 61.003(8)
(defining “[i]nstitution of higher education”). Critically, the enrollment plans must target higher
enrollment of Hispanic students and African American male students. Id. § 51.810(b)(1)(C).

42
See, e.g., CENTERPOINT ENERGY, ANNUAL PROGRESS REPORT ON FIVE-YEAR PLAN TO ENHANCE SUPPLIER
AND WORKFORCE DIVERSITY 4 (2024), https://interchange.puc.texas.gov/Documents/36542_252_1450474.PDF
(providing data on: (1) sex and race of employees and (2) historically underutilized business and small business
suppliers); GRANDE COMMUNICATIONS NETWORK, LLC, ANNUAL TEXAS WORKFORCE DIVERSITY REPORT 3–4
(2023), https://interchange.puc.texas.gov/Documents/55399_74_1356205.PDF (same); SOUTHWEST TEXAS
TELEPHONE COMPANY D/B/A SOUTHWEST TEXAS COMMUNICATIONS, ANNUAL PROGRESS REPORT ON WORKFORCE
AND SUPPLIER CONTRACTING DIVERSITY 4–5 (2020), https://interchange.puc.texas.gov/Documents/30240_3295
_1103171.PDF (same); DELL TELEPHONE COOPERATIVE, INC., ANNUAL PROGRESS REPORT ON FIVE-YEAR PLAN TO
ENHANCE SUPPLIER AND WORKFORCE DIVERSITY 3–4 (2018), https://interchange.puc.texas.gov/Documents/
30240_3067_1003304.PDF (same); LONE STAR TRANSMISSION, LLC, ANNUAL PROGRESS REPORT ON FIVE-YEAR
PLAN TO ENHANCE SUPPLIER AND WORKFORCE DIVERSITY 4–5 (2015), https://interchange.puc.texas.gov/Documents/
36542_150_877624.PDF (same); SOUTHWESTERN BELL TELEPHONE COMPANY D/B/A AT&T TEXAS, ANNUAL
PROGRESS REPORT ON FIVE-YEAR PLAN TO ENHANCE SUPPLIER AND WORKFORCE DIVERSITY 4–6 (2010),
https://interchange.puc.texas.gov/Documents/30240_1742_688471.PDF (same); CENTERPOINT ENERGY, ELECTRIC
REPORTS AND PLANS RELATING TO WORKFORCE DIVERSITY AND BUSINESS PRACTICES 5 (2006),
https://interchange.puc.texas.gov/Documents/33424_6_535160.PDF (same), https://interchange.puc.texas.gov/
Documents/33424_6_535161.PDF; TXU ELECTRIC, FIVE-YEAR DIVERSITY PLAN 4–9 (2000),
https://interchange.puc.texas.gov/Documents/279993.TIF (same).
- Page 56

Institutions must submit annual reports to the Texas Higher Education Coordinating Board
detailing these plans and outcomes. Id. § 51.810(c). Those reports must also include demographic
breakdowns of entering classes by race, ethnicity, economic status, and high school standing in
addition to descriptions of recruitment and retention efforts for racial and ethnic minorities. Id.
§ 51.4032. In turn, the Coordinating Board summarizes these reports for the Governor’s budget
office and Legislative Budget Board, analyzes institutional compliance, and notifies those
offices—plus House and Senate appropriations chairs—of any failures. Id. §§ 51.404–.405.

This scheme discriminates by race and sex, specifically privileging black males and
Hispanics. Such facial classifications “engender a presumption of discriminatory purpose.”
Communities for Equity, 459 F.3d at 694; SECSYS, 666 F.3d at 685. The programs’ failure to “target
a specific episode of past discrimination” for remediation forecloses any claim of a compelling
governmental interest, Vitolo, 999 F.3d at 361—effectively invoking “general social ills and
call[ing] it a day.” Nuziard, 721 F. Supp. 3d at 480. Moreover, nothing supports the tacit proposition
that black males and Hispanics suffered past discrimination that spared black females; this renders
the provision underinclusive at least as to black females. Id. at 489 (explaining that “[a]n
underinclusive presumption excludes groups necessary to further the identified interest”). In fact,
the programs likely suffer from broader underinclusiveness by withholding equal treatment from
similarly situated students of other races attending the same low-performing high schools. Finally,
the reporting mandates reinforce the illegitimate aim of marshalling government resources to
achieve race- and sex-based outcomes, constituting “discrimination for its own sake, which the
Constitution forbids.” SFFA, 600 U.S. at 209 (cleaned up).

Race-based preferences also appear in accounting scholarships and internships. The Texas
State Board of Public Accountancy administers scholarships for accounting students from
dedicated funds. TEX. OCC. CODE § 901.653. The Board awards these scholarships in the manner
it “determines best serves the public purpose.” Id. § 901.654(a). In doing so, the Board must
consider each applicant’s “ethnic or racial minority status.” Id. § 901.654(b)(2). The Board further
prioritizes minority students through regulations “to encourage internships for minority and
disadvantaged students.” Id. § 901.659(a). These rules incentivize participation by accounting
firms through “standards for appropriate recognition of an accounting firm for its efforts in training
and hiring minority or disadvantaged students.” Id. § 901.659(b). Notably, the Board officially
publishes “the names of accounting firms providing internships or hiring two or more
disadvantaged or minority students each calendar year.” 22 TEX. ADMIN. CODE § 520.10.

These schemes openly and unlawfully distribute benefits and burdens by race. See Parents
Involved, 551 U.S. at 720. They also lack the “reasonable durational limits” essential for remedial
programs. See Grutter, 539 U.S. at 342. To be sure, a program may confer an educational benefit
“to a student who overcame racial discrimination” if the benefit is “tied to that student’s courage
and determination.” SFFA, 600 U.S. at 230–31. Group membership cannot be a substitute for
individualized evaluation, as the Constitution demands that each student “be treated based on his
or her experiences as an individual—not on the basis of race.” Id. at 231. Ultimately, it bears
repeating that “[e]liminating racial discrimination means eliminating all of it.” Id. at 206. This
necessarily includes the Occupations Code provisions granting preferential treatment in
educational and training benefits.
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ii. Race- and sex-based preferences in park funding trigger
and fail strict scrutiny
The Parks and Wildlife Code embeds race- and sex-based classifications in grants
supporting local parks operated by counties, municipalities, and other political subdivisions. 43
Section 24.005 applies to certain smaller counties, municipalities, and political subdivisions. See
TEX. PARKS & WILD. CODE § 24.002 (establishing the “Texas recreation and parks account”).
Section 24.055 applies to large counties and municipalities. See id. §§ 24.051(4), .052 (establishing
the “large county and municipality recreation and parks account”). While the statutory frameworks
governing these provisions differ in some respects, Sections 24.005 and 24.055 function nearly
identically and can thus be treated together for present purposes.

Both provisions authorize the Texas Parks and Wildlife Department (TPWD) to fund half
the costs of planning, acquiring, or developing parks, recreational areas, or open spaces. Id.
§§ 24.005(a), .055(a). Grants target “recreation, conservation, or education programs for
underserved populations.” Id. §§ 24.005(d), .055(d). Funds must be used “to encourage and
implement increased access to and use of parks, recreational areas, cultural resource sites or areas,
and open space areas by underserved populations.” Id. An “underserved population” is statutorily
defined to include “any group of people that is” “minority” or “female.” Id. §§ 24.001(12)(B), (D),
.051(11)(B), (D). The term “minority” is not defined, but to the extent minority refers to race,
color, or ethnicity, this statutory classification triggers strict scrutiny. 44 See Croson, 488 U.S. at
476–77. And the preference in funding for “female[s]” likewise triggers strict scrutiny under Texas
law. Bell, 95 S.W.3d at 257–58.

These provisions cannot survive strict scrutiny. Here again, the only plausibly compelling
interest is remediation of specific past instances of discrimination. See SFFA, 600 U.S. at 207. But
a proponent of these impermissible classifications would need to show discrimination by the
appropriate government unit: TPWD itself at the broadest possible level—if not a smaller unit
within TPWD. See Dean, 438 F.3d at 454; see also supra Part II.A.4. Even then, the statutes are
likely overinclusive because they favor women over men and all racial minorities rather than
TPWD’s alleged victims of prior discrimination. Croson, 488 U.S. at 506 (condemning “random
inclusion of racial groups that, as a practical matter, may never have suffered from discrimination”
in the relevant industry and geographic area); see also, e.g., Nuziard, 721 F. Supp. 3d at 480
(explaining that “an overinclusive presumption includes groups unnecessary” to further the
identified interest).

These provisions systematically preference women over men and some races over others
in funding for public parks throughout the state, all without a remedial focus on past discrimination

43
We note that grants for local parks are by no means the only awards that mandate some consideration of
race or ethnicity. See, e.g., TEX. GOV’T CODE § 444.024(c) (requiring the Texas Commission on the Arts to “adopt
equitable procedures for the distribution of grants to recipients who reflect the geographical, cultural, and ethnic
diversity of the state’s population”).
44
As explained in Part II.A.3, supra, the term “minority” is best read to mean racial or ethnic minorities.
- Page 58

or another compelling interest that might justify the chosen means. Put simply, this across-the-
board preference for women’s and minority interests in state funding cannot survive strict scrutiny.

iii. Consideration of race in designation for special projects
triggers and fails strict scrutiny
The Texas Enterprise Zone Act establishes an extensive economic development program
aimed at encouraging private investment and job creation in geographic areas suffering from
severe economic distress. TEX. GOV’T CODE §§ 2303.001–.002. Based on poverty levels and other
metrics, certain areas in Texas qualify as “enterprise zones.” Id. § 2303.101. Within these special
zones, qualified businesses can make requests—through local governments—to the Texas
Economic Development Bank (“TEDB”) to designate a business project as “an enterprise project.”
Id. § 2303.404(a). In reviewing these requests, the TEDB is instructed to assess the degree of “local
effort to develop and revitalize” the municipality or county. Id. § 2303.405(b)(6). The TEDB must
also determine a private entity’s “local effort” in part by that entity’s “commitments to hire
minority workers and to contract with minority-owned businesses.” Id. § 2303.405(e)(3). Only
after a business demonstrates “local effort” and is designated as an “enterprise project” does it
become eligible to participate in numerous incentive programs—including exemptions from state
and local regulations, state contracting preferences, tax refunds, and the reduction or elimination
of certain taxes and fees. See, e.g., id. §§ 2303.501–.517.

Chapter 2310 mirrors this framework for defense readjustment zones, which aid
communities hit by military base closures or defense cuts. Id. §§ 2310.101–.102. Areas may qualify
by suffering a threshold level of defense-related job losses that are tied to base realignments,
contract cancellations, or spending cuts. Id. § 2310.102. Businesses seek “defense readjustment
project” status through zone authorities, and the TEDB assesses identical “local effort” factors. Id.
§§ 2310.304–.305. For private entities, these factors include the entity’s “commitments to hire
minority workers and to contract with minority-owned businesses.” Id. § 2310.305(e)(3).
Approved projects unlock the same valuable government incentives as those enjoyed by enterprise
projects. Id. §§ 2310.401–.413. The TEDB must further prioritize readjustment zones in grants,
loans, services, and regulatory relief—coordinating with agencies on job training, small business
aid, and streamlined permitting. Id. §§ 2310.053–.054. Accordingly, the same equal-protection and
equal-rights analysis applies to both enterprise projects and defense readjustment projects.

As before, the term “minority” in these provisions is reasonably read to implicate racial
and ethnic minorities. See supra Part II.A.3. These schemes thereby condition lucrative
government benefits on race-based hiring and contracting preferences. See TEX. GOV’T CODE
§§ 2303.405(e)(3), 2310.305(e)(3). This, of course, triggers strict scrutiny. See SFFA, 600 U.S. at
206. To justify any alleged remedial efforts, the government must demonstrate specific acts of
discrimination by the relevant government unit, Dean, 438 F.3d at 454, or show that the
government unit “had essentially become a ‘passive participate’ in a system of racial exclusion
practiced by elements of [a] local . . . industry.” Vitolo, 999 F.3d at 361 (alteration in original)
(citation omitted). But neither showing is possible here because the relevant programs blanket
every qualifying county, municipality, and industry across the state—precluding government-unit-
specific or industry-specific findings. This form of broad, societal remediation fails as a
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compelling government interest. Shaw, 517 U.S. at 909 (“Efforts to alleviate the effects of past
societal discrimination is not a compelling interest.”). Moreover, even assuming there was a valid
interest, these provisions are likely overinclusive in their application to all minorities, not just those
essential to any alleged remediation. Nuziard, 721 F. Supp. 3d at 480; Croson, 488 U.S. at 506; see
also supra Parts II.A.4, II.A.5.ii.

In sum, participation in these valuable programs cannot lawfully be predicated on an
employer’s commitment to hire minorities or contract with minority owned businesses. See TEX.
GOV’T CODE § 2303.405(e)(3).

B. Private Sector

Just as the U.S. Supreme Court’s higher education decisions in Bakke and Grutter inspired
corporations to disguise discrimination as “diversity” within the corporate world, see supra
Part I.F.3, the Court’s recent holding in SFFA prompted many in the private sector to examine DEI
initiatives that consider protected traits in employment decisions. See, e.g., Ishan K. Bhabha et al.,
One Year Later: The Implications of SFFA for Corporate America, HARV. L. SCH. F. ON CORP.
GOVERNANCE (Aug. 6, 2024), https://corpgov.law.harvard.edu/2024/08/06/one-year-later-the-
implications-of-sffa-for-corporate-america/ (referring to increase in DEI challenges and fear
among employers). See generally SFFA, 600 U.S. at 218–25. Others struck a different cord and, at
present, the private sector remains infused with a host of practices that openly discriminate based
on race and sex. See infra Part II.B.1. But these practices raise significant liability under both
federal and state law, see infra Part II.B.2, and run headlong into the reality that
“[e]liminating . . . discrimination means eliminating all of it.” SFFA, 600 U.S. at 2162.

1. Present-day DEI practices

Private-sector DEI initiatives generally resolve into five broad groups: hiring and
promotion processes, compensation packages, internal groups and training programs, external
commercial relationships, as well as governance structure and public goals. We thus begin by
briefly detailing the present scope of each category.

i. Hiring and promotion processes

DEI policies are routinely incorporated into recruitment and selection. Many of these
initiatives center around policies, benchmarks, or numerical targets designed to increase
representation of certain demographic groups. This involves demographic hiring goals or quotas
and board diversity mandates. See, e.g., Iris Bohnet & Siri Chilazi, Goals and Targets for
Diversity, Equity, and Inclusion: A High Leverage Point to Advance Gender Equality in the U.S.
Tech Industry, HARV. KENNEDY SCH. 9–11 (2020), https://www.hks.harvard.edu/sites/default
/files/2024-01/DEI%20Goals_Bohnet%20Chilazi_FINAL%5B65%5D.pdf; Letter from Ken
Paxton, Tex. Att’y Gen., to Major L. Firms at 3 (Apr. 3, 2025), https://www.oag.state.tx.us
/sites/default/files/images/press/Letter%20to%20Law%20Frims%20EEOC%20Info%20Request
.pdf; Letters from U.S. EEOC, to Various L. Firms at 12 (Mar. 17, 2025), https://www.eeoc
.gov/sites/default/files/2025-03/Law_Firm_Letters_-_03.17.2025.pdf; Letter from Ken Paxton,
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Tex. Att’y Gen., to Major Fin. Insts. at 2–4 (Jan. 27, 2025), https://www.texasattorneygeneral.gov
/sites/default/files/images/press/Updated%20Paxton%20Financial%20Institutions%20Letter.pdf.
Board diversity mandates, for example, include policies adopted to require a minimum number of
female or minority directors on governing boards. See, e.g., Letter from Ken Paxton (Jan. 27,
2025), supra, at 3–4. These mandates may involve enforcement through proxy-voting guidelines
or shareholder resolutions conditioning board approval on demographics. See, e.g., id.

DEI also plays a part in employer actions leading up to a job offer. For instance, some
companies require interview panels or candidate pools to include specific demographic groups,
minimizing a focus on hiring based solely on merit. See, e.g., EEOC, What You Should Know
About DEI-Related Discrimination at Work, https://www.eeoc.gov/wysk/what-you-should-know-
about-dei-related-discrimination-work#_edn26. Companies also tailor job descriptions and
recruiting materials to appeal to individuals of specific demographics. This may be accomplished
through coded phrasing, which can function as identity-based screening. See, e.g., Memorandum
from Pam Bondi, supra, at 8–9. Finally, another common DEI initiative takes shape in early-career
programs that build DEI “pipelines,” such as internships, fellowships, and student programs, that
are limited to specific demographic groups. This includes diversity fellowships restricted to certain
racial or gender populations, summer programs for law students in which race or sex are considered
for eligibility, preferred application tracks and partnerships with historically black colleges and
universities and minority-serving institutions, as well as mentorship initiatives exclusively
available to certain racial or gender groups. See EEOC, What You Should Know About DEI-Related
Discrimination at Work, supra; see also, e.g., Letters from U.S. EEOC, supra, at 1–2, 16;
Memorandum from Pam Bondi, supra, at 5.

ii. Pay, bonuses, and promotion goals

Many companies also incorporate DEI into compensation and promotion frameworks.
These practices typically include compensation incentives tied to representation goals, DEI metrics
in performance reviews, and promotion criteria with DEI targets. See, e.g., SEMLER BROSSY
CONSULTING GRP. LLC, ESG + Incentives 2024 Report 1–2 (2024), https://semlerbrossy.com/wp-
content/uploads/2024/10/ESG-Report-Issue-1-2024-10-10.pdf; Natalie Norfus, 4 Steps To
Integrate DEI Metrics Into Performance Reviews and KPIs, FORBES (Mar. 5, 2025), https://www.
forbes.com/councils/forbeshumanresourcescouncil/2025/03/05/4-steps-to-integrate-dei-metrics-
into-performance-reviews-and-kpis/. For example, it was found that the “most prevalent” metric
in incentive plans for S&P 500 companies in the 2023 fiscal year was DEI-related. See SEMLER
BROSSY CONSULTING GRP. LLC, supra, at 3. These DEI measures are often implemented as
discrete performance goals or as components with broader environmental, social, or governance
scorecards. See id. at 13. For the twenty percent of S&P 500 companies that implemented short-
term executive compensation tied to DEI metrics in 2021, that metric was usually part of a
weighted scorecard or a weighted measure up to approximately twenty percent of compensation.
See FARIENT ADVISORS LLC, Use of Diversity, Equity & Inclusion (DE&I) Metrics in the S&P
500 (Feb. 2, 2021), https://farient.com/2021/02/02/use-of-diversity-equity-and-inclusion-dei-
metrics-in-the-sp500/.
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iii. Employee resource groups, mentoring, and training

A variety of internal corporate programs fall within the DEI framework as well. They
frequently take the form of employee resource groups (ERGs) and affinity networks. See, e.g.,
Memorandum from Pam Bondi, supra, at 8; Letters from U.S. EEOC, supra, at 2; EEOC, What
You Should Know About DEI-Related Discrimination at Work, supra. These are “voluntary,
employee-led groups” typically organized around shared characteristics. Claire Hastwell, What
are Employee Resource Groups (ERGs), GREAT PLACE TO WORK (Jan. 7, 2023),
https://www.greatplacetowork.com/resources/blog/what-are-employee-resource-groups-ergs.
Common examples include groups centered around racial or gender identity. See Barbara DeLollis
& Janelle Conaway, Exploring Employee Resource Groups in the Age of DEI, HARV. BUS. SCH.
(June 11, 2025), https://www.hbs.edu/bigs/lumumba-seegars-employee-resource-groups. ERGs
often provide mentorship, networking, professional development, and leadership exposure. See
Hastwell, What are Employee Resource Groups, supra; DeLollis & Conaway, Exploring
Employee Resource Groups in the Age of DEI, supra. Formal programs focused on curating career
opportunities for employees of a certain demographic also offer similar benefits outside of the
traditional ERG. See EEOC, What You Should Know About DEI-Related Discrimination at Work,
supra; see, e.g., Memorandum from Pam Bondi, supra, at 15, 30. Likewise, this can involve
training programs that are only made available to certain demographics too. See EEOC, What You
Should Know About DEI-Related Discrimination at Work, supra; see, e.g., Letters from U.S.
EEOC, supra, at 30.

Finally, a key component of corporate DEI programs is often found in DEI training itself—
serving as part of an organization’s “first-class diversity effort.” See Jane DiRenzo Pigott,
Teaching Can Help: Diversity Training at Your Law Firm, in 16 BUS. L. TODAY 11, 11 (Oct.
2006). A broad term, “[t]he concept of diversity training is to have a dialogue about diversity that
sensitizes people to the issues and creates some awareness on both substantive topics and the
communication skills necessary for diversity to become an integrated priority of the organization.”
Id. In other words, it “aims to boost participants’ awareness about different types of diversity,
appreciating differences among co-workers, and [to] provide knowledge and strategies to enhance
employees’ interpersonal and communication skills across diversity to help build a positive work
environment.” Carolyn Henzi Plaza et al., Diversity Training in the Workplace, PENN. STATE
EXTENSION (Jan. 10, 2024), https://extension.psu.edu/diversity-training-in-the-workplace.
Notably, however, it is not uncommon for these trainings to include physical segregation,
stereotypes, or “[n]egative generalizations,” see, e.g., Chislett v. N.Y.C. Dep’t of Educ., 157 F.4th
172, 188 (2d Cir. 2025), in addition to compulsory affirmation of ideological positions or
confessions of bias and privilege based on protected characteristics. See, e.g., Memorandum from
Pam Bondi, supra, at 9.

iv. Supplier diversity

Some companies further extend the boundaries of DEI initiatives beyond internal
employment decisions to external commercial relationships, particularly in supply chains. These
practices manifest in vendor selection criteria that preferentially favor minority-owned, women-
owned, or otherwise “diverse” businesses coupled with fixed numerical targets or spending
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commitments. See, e.g., Letter from Ken Paxton (Jan. 23, 2025), supra, at 4. Indeed, America’s
200 largest public companies collectively pledged $50 billion to diverse suppliers before 2030.
INST. FOR SUPPLY MGMT., Supplier Diversity Programs: Boosting DEI in Procurement (Dec. 5,
2025), https://www.ism.ws/supply-chain/dei-in-procurement/. In reality, companies may
accomplish their stated goals by employing supplier scorecards that link procurement outcomes to
DEI goals and implementing requirements for diverse suppliers into supplier bidding, selection,
and management processes. See, e.g., INTEL CORP., 2023-24 Corporate Responsibility Report 66
(2024), https://csrreportbuilder.intel.com/pdfbuilder/pdfs/CSR-2023-24-Full-Report.pdf.

v. Governance structures and public goals

The rise of DEI programs and initiatives has also prompted changes in corporate
governance structures. Companies have created “Chief Diversity Officer” positions and formed
board-level committees to monitor as well as advance DEI initiatives and programs. See Matteo
Tonello, DEI in Transition: 2025 Corporate Diversity Disclosure Trends, HARV. L. SCH. F. ON
CORP. GOVERNANCE (Aug. 20, 2025), https://corpgov.law.harvard.edu/2025/08/20/dei-in-
transition-2025-corporate-diversity-disclosure-trends/#:~:text=A%20growing%20number%20of
%20firms,level%20commitment%20and%20strategic%20alignmentl; Anand & Winters, supra, at
368–69. Chief Diversity Officers, for example, “ensure DEI is at the forefront of a company’s
goals and missions” by “being accountable for compliance, advocacy, and education of [their]
compan[ies].” Maria Minor, Here’s The Bottom Line Reason Why Companies Need a Chief
Diversity Officer, FORBES (May 3, 2021), https://www.forbes.com/sites/mariaminor/2021/05/03
/heres-the-bottom-line-reason-why-companies-need-a-chief-diversity-officer/. They “guarantee[]
that strategic goals, company policies, and laws surrounding DEI are . . . being followed and
carried out.” Id. These C-Suite officers can wield significant influence over a broad range of
company policies, including those affecting hiring and promotions. See, e.g., Buchholz, The Rise
and Impact of Chief Diversity Officers, supra (referring to a CDO’s responsibility to ensure a
“diversifie[d]” workforce).

This shift in corporate governance structure builds on the public pledges made by
companies to hit certain representation goals and are often galvanized by concrete hiring plans that
aim to ensure success. See, e.g., Lavietes, ‘Watershed moment’: Corporate America Looks to Hire
More Black People, supra (exemplifying corporate pledges to fill a certain percentage of positions
with individuals of specific demographic groups); Feiner, Tech Companies Made Big Pledges to
Fight Racism Last Year—Here’s How They’re Doing So Far, supra (highlighting representation
metrics in hiring and board composition and one company’s executive team creating a “detailed
plan to meet those goals with their teams”). Meeting these targets, of course, accompanies the
implementation of the initiatives discussed above.
2. Corporate DEI practices invite four categories of liability
under state and federal law

The DEI practices discussed above beg discussion of four broad categories of liability. To
start, any initiative that predicates employment opportunities on membership in a particular race-
or sex-based group necessarily triggers liability under frameworks like Title VII and the TCHRA.
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See infra Part II.B.2.i. DEI training programs may also create a hostile work environment if the
underlying programs disparage certain demographics or otherwise employ troubling rhetoric that
targets protected characteristics. See infra Part II.B.2.ii. Separately, companies risk liability under
Section 1981 if contracting opportunities are not provided to all races on equal terms. See infra
Part II.B.2.iii. This collective liability—under Title VII, the TCHRA, and Section 1981—raises a
final concern with state and federal securities laws, where risk requires disclosure and fiduciary
duties create tension with ideological goals. See infra Part II.B.2.iv.

i. Unlawful employment practices under Title VII and the
TCHRA

Both Title VII and TCHRA prohibit unlawful employment practices, and these statutory
schemes are largely “governed by . . . identical law.” Paugh v. Lockheed Martin Corp., 474 F.
Supp. 3d 861, 865 n.1 (W.D. Tex. 2020); see also Prairie View A&M, 381 S.W.3d at 507
(explaining that Texas courts “look to federal law for guidance only when the relevant provisions
of Title VII are analogous” with the TCHRA). Indeed, both recognize that an “employer commits
an unlawful employment practice if” he, “because of race, color, . . . religion, sex, [or] national
origin” either: (1) “fails or refuses to hire an individual, discharges an individual, or discriminates
in any other manner against an individual in connection with compensation or the terms,
conditions, or privileges of employment;” or (2) “limits, segregates, or classifies an employee or
applicant for employment in a manner that would deprive or tend to deprive an individual of any
employment opportunity or adversely affect in any other manner the status of an employee.” TEX.
LAB. CODE § 21.051(1)–(2); accord 42 U.S.C. § 2000e-2(a)(1)–(2) (same, slight wording
differences); see also TEX. LAB. CODE § 21.002(8) (defining “[e]mployer”); 42 U.S.C. § 2000e(b)
(same). These frameworks also provide that “an unlawful employment practice is established when
the complainant demonstrates that race, color, religion, sex, or national origin was a motivating
factor for any employment practice, even though other factors also motivated the practice.”
42 U.S.C. § 2000e-2(m); accord TEX. LAB. CODE § 21.125(a). Likewise, employers may limit
available remedies once an unlawful motivating factor is proven by demonstrating that they
“would have taken the same action in the absence of the impermissible motivating factor.”
42 U.S.C. § 2000e-5(g)(2)(B)(i)–(ii); TEX. LAB. CODE § 21.125(b).

But the shared text of these frameworks does not mean they prove identical in all respects
and, as such, we proceed in steps. 45 To start, Title VII and the TCHRA are commonly said to bar
two brands of discrimination: disparate impact and disparate treatment. See City of Austin v.
Chandler, 428 S.W.3d 398, 406 (Tex. App.—Austin 2014, no pet.). Whereas the disparate
treatment claims “involve employment actions that treat . . . employees differently based on the
employee’s race, gender, or other protected status” and “require proof of a discriminatory

45
Certain distinctions are not relevant for the purposes of this opinion, compare, e.g., 42 U.S.C. § 2000e-
5(e)(1), with TEX. LAB. CODE § 21.202(a) (concerning a pre-suit difference), and we make no effort to catalogue all
distinctions.
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motive,” 46 the latter traditionally involves “employment practices or policies that are facially
neutral in their treatment of . . . protected groups[] but[] . . . have a disproportionately adverse
effect on such a protected group,” Chandler, 428 S.W.3d at 406 (citation omitted).

Next are the differing causation standards. Title VII carries with it two: “but for” and
motivating factor. See Bostok v. Clayton Cnty., Georgia, 590 U.S. 644, 657 (2020). The former is
the traditional approach, based on the “because of” language in subsection 2000e-2(a), while the
latter is based on subsection 2000e-2(m). Id. The U.S. Supreme Court has explained that under the
“but for” test, disparate treatment “is established whenever a particular outcome would not have
happened ‘but for’ the purported cause.” Id. at 656. The test can be satisfied even if other factors
contributed to the employer’s decision. Id. at 659. In contrast, the “motivating factor” standard
under subsection 2000e-2(m) is a “more forgiving standard,” under which liability may be shown
even if race or sex was not the but-for cause of the employer’s challenged action. See id. at 657.
The motivating factor standard in subsection 21.125(a), on the other hand, applies to all disparate-
treatment claims—i.e., claims under subsection 21.051(1). See Quantum Chem. Corp, 47 S.W.3d
at 480; Arismendez v. Nightingale Home Health Care, Inc., 493 F.3d 602, 607 (5th Cir. 2007).
This is all to say that a disparate treatment claim may arise when an employer takes an adverse
employment action because of—either but for or at least motivated by—an individual’s protected
status. See 42 U.S.C. § 2000e-2(a)(1), (m); TEX. LAB. CODE §§ 21.051(1), .125(a).

It also bears emphasis that the universe of actionable adverse “employment actions” under
both frameworks is quite broad. 47 Organized internal programs like employee resource groups,
affinity groups, mentoring, and trainings 48 may prove unlawful under either Title VII or the
TCHRA if they discriminate with an eye towards an employee’s protected characteristics.
Organized programs, for example, are likely “terms, conditions, or privileges of employment”
under Title VII. 49 See Firefighters Inst. for Racial Equal. v. City of St. Louis, 549 F.2d 506, 515

46
Given the nature of the DEI programs described earlier, however, we focus only on the latter. See, e.g.,
EEOC, What You Should Know About DEI-Related Discrimination at Work, supra. See generally 42 U.S.C. § 2000e-
2(a)(1); TEX. LAB. CODE § 21.051(1). This also obviates the need to discuss recent challenges to disparate impact
theories. See generally Exec. Order No. 14281, 90 Fed. Reg. 17537, 17537 §§ 1–2 (Apr. 23, 2025).
47
Until recently, the Fifth Circuit imposed an additional hurdle not found in the text of Title VII: the alleged
discrimination needed to constitute an “ultimate employment decision,” placing a heavier burden on plaintiffs to
demonstrate liability. See Hamilton v. Dallas Cnty., 79 F.4th 494, 497, 501 (5th Cir. 2023). Texas courts, following
the Fifth Circuit’s lead, adopted this federal standard for the TCHRA. See City of Pasadena v. Poulos, No. 01-22-
00676-CV, 2023 WL 7134974, at *10 (Tex. App.—Houston [1st Dist.] Oct. 31, 2023, no pet.). But the en banc Fifth
Circuit reversed course—removing this atextual condition from its jurisprudence. Hamilton, 79 F.4th at 501–02. Texas
courts have yet to do the same for the TCHRA. See Univ. of Tex. at El Paso v. Aranda, No. 08-25-00083-CV, 2025
WL 3164675, at *5 n.3 (Tex. App.—El Paso Nov. 12, 2025, no pet. h.).
Title VII and the TCHRA also expressly address training programs, with Title VII stating that it is an
48

“unlawful employment practice” for an employer to discriminate against an individual “in admission to, or
employment in, any program established to provide apprenticeship or other training.” 42 U.S.C. § 2000e-2(d); accord
TEX. LAB. CODE § 21.054 (prohibiting discrimination “in admission to or participation in the [training] program”).
49
At least one federal Texas case pre-dating Hamilton concluded that a denial of access to things like training,
leadership courses, and mentoring was not an adverse employment decision. See Earle v. Aramark Corp., 247 F.
App’x 519, 523 (5th Cir. 2007). Hamilton nonetheless casts doubt on Earle’s reasoning. See supra n. 47.
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(8th Cir. 1977) (holding that informal, non-sanctioned “supper clubs” within firehouse fell under
the “terms, conditions, or privileges of employment” because even employees’ “psychological as
well as economic fringes” are protected under Title VII); cf. Vaughn v. Edel, 918 F.2d 517, 523
(5th Cir. 1990) (explaining that even a benign racial reason may still constitute “otherwise”
discrimination with respect to “terms, conditions, or privileges of employment”).

An employer may also incur liability for segregation that results from these programs or
trainings without actively or passively promoting the resulting segregation itself. The Ninth
Circuit, for example, previously concluded that an employer could be subject to Title VII liability
where they “created the conditions that led to self-segregation.” Domingo v. New England Fish
Co., 727 F.2d 1429, 1438 (9th Cir. 1984), modified on other grounds, 742 F.2d 520 (9th Cir. 1984).
Eight Circuit precedent confronted an even more remote situation—where the employer was aware
of but did not prevent segregation in employer-provided facilities—and still endorsed liability.
Firefighters Inst., 549 F.2d at 514–15. Taken together, it is reasonable to conclude that private-
sector DEI initiatives that either mandate or practically result in known segregation would raise
liability.

DEI initiatives related to hiring or compensation—like hiring goals or quotas, diversity
board mandates, structured interview requirements, internships, fellowships, pipeline programs,
and targeted recruitment—may also constitute unlawful employment actions under Title VII, the
TCHRA, or both. These initiatives undoubtedly relate to hiring actions. See supra pp. 58–59.
Neither can there be question that these initiatives reflect a desire to achieve preferential
demographic representation to the exclusion of others when “favoring one [demographic trait]
necessarily means disfavoring those of another.” Price v. Valvoline, L.L.C., 88 F.4th 1062, 1068
(5th Cir. 2023) (Ho, J., concurring). See supra pp. 58–59. Even more, publicly professed goals are
reasonably understood to increase internal pressure favoring this pernicious exclusion to meet
those goals. See supra p. 59.

It is important to acknowledge that the “mere existence” of a DEI policy, in isolation, may
not impose liability under Title VII. 50 See, e.g., Weinerth v. Talley, No. 4:17-cv-0067, 2018 WL
2729205, at *4 (W.D. Va. June 6, 2018); Jones v. Bernanke, 493 F. Supp. 2d 18, 29 (D.D.C. 2007).
But “evidence that such a policy was ‘actually relied upon’ in taking a specific employment action
may support a finding of unlawful discrimination.” Weinerth, 2018 WL 2729205 at *4 (quoting
Reed, 174 F. Supp. 2d at 186). Indeed, courts often consider “whether a diversity policy goes
beyond mere aspirational goals.” Dill v. Int’l Bus. Machines Corp., No. 1:24-CV-852, 2025 WL
913744, at *5 (W.D. Mich. Mar. 26, 2025). 51 This typically looks to whether the policy
(1) “define[s] specific quotas for any specific position or the workforce overall,” (2) “refer[s] to

50
See also, e.g., McCormick v. Gasper, No. 22-1033, 2022 WL 16586621, at *4 (6th Cir. Nov. 1, 2022)
(stating that a goal to improve diversity did not constitute discrimination); Reed v. Agilent Techs., Inc., 174 F. Supp.
2d 176, 185–86 (D. Del. 2001) (“Merely producing anecdotal evidence regarding the aspirational purpose of an
employer’s diversity policy, and its intent to ameliorate any underutilization of certain groups, is not sufficient.”).
51
This case applied a heightened standard in “reverse discrimination” cases—i.e., where the plaintiff is part
of the majority. Dill, 2025 WL 913744 at *4. But the U.S. Supreme Court recently invalidated that standard. See Ames,
605 U.S. at 309.
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any caste system designating a hierarchical preference for certain racial groups over others,”
(3) “provide[s] specific plans for how its diversity goals are to be achieved,” id. (quoting Bradley
v. Gannett Co., No. 1:23-cv-1100, 2024 WL 3905817, at *5 (E.D. Va. Aug. 20, 2024), appeal
docketed, No. 25-2190 (4th Cir. Oct. 7, 2025)), or (4) “places managers under ‘pressure to increase
minority percentages,’” id. (quoting Atkins v. Denso Mfg. Tenn., No. 3:09-cv-520, 2011 WL
5023392, at *5 (E.D. Tenn. Oct. 20, 2011)). Additionally, some courts have considered “whether
a diversity policy was ‘actually implemented’ or ‘held sway over the decision maker.’” Id. (quoting
Pilon v. Saginaw Valley State Univ., 298 F. Supp. 2d 619, 632–33 (E.D. Mich. 2003)).

One Fourth Circuit case emphasized that employers may utilize DEI programs but “cannot
. . . take adverse employment actions against employees based on their race or gender to implement
such a program.” Duvall v. Novant Health, Inc., 95 F.4th 778, 791 n.10 (4th Cir. 2024). There, the
court reviewed a Title VII claim as to whether a white male presented sufficient evidence for a
jury to find that his protected characteristics played a motivating factor in his termination where
he was replaced, “at one point or another,” with “three women, two of whom were racial
minorities.” Id. at 786, 788, 791. The jury’s finding followed evidence of the employer’s
“widescale” diversity and inclusion initiative, which sought to “embed diversity and inclusion
throughout” the company. Id. This was in part accomplished by the employer’s efforts to develop
and employ metrics, long-term financial incentive plans tied to executive bonuses, and “a system
wide decision making process that include[d] a diversity and inclusion lens.” Id. at 784, 789.
Ultimately, the court agreed that the evidence “was more than sufficient for a reasonable jury to
conclude that” the employer took adverse employment actions against the employee based on his
race or gender to implement its DEI program. Id.

The Fourth Circuit is far from alone in this approach. A federal district court recently
denied an employer’s motion to dismiss after finding an employee’s allegations that “specific
percentage targets for racial and gender compensation of” an employer’s workforce, coupled with
“a system of financial incentives to reward [or penalize] executives” based on reaching “those
targets,” plausibly supported an inference that the employer improperly considered race or gender
in its employment decisions. Dill, 2025 WL 913744 at *1, 5. The Fifth Circuit also previously
concluded a “balanced workforce” program, which “identified explicit racial goals for each job
and grade level” and evaluated managers to determine their compliance, was “direct evidence” on
which a jury could conclude the employer considered race in employment policies—thereby
limiting employment opportunities for certain employees. See Frank v. Xerox Corp., 347 F.3d 130,
137 (5th Cir. 2003). It follows that many of the DEI initiatives discussed earlier risk disparate
treatment to the extent they come to bear on an employment decision, see Weinerth, 2018 WL
2729205 at *4, or “call[] for . . . particular action [or] . . . the consideration of [a protected class]
to the exclusion of all other factors,” Bradley, 2024 WL 3905817, at *6. See also, e.g., McCormick,
2022 WL 16586621, at *4 (finding that a recruiting target was not discriminatory when it did not
“commit to or require the hiring of more diverse applicants”).

Even undertaking an employment action based on a protected class simply “because [of]
lack of diversity” could trigger employer liability under both Title VII and the TCHRA. See
Castleberg v. City of Dallas, No. 3-09-CV-1354-M-BD, 2011 WL 2559521, at *3, 5 (N.D. Tex.
June 3, 2011), rep. and recommendation adopted, No. 03-09-CV-1354-M-BD, 2011 WL 2559516
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(N.D. Tex. June 28, 2011) (alteration in original). In Castleberg, a white male was passed over for
a mid-level detective position that went to a different demographic group. Id. at *1. The evidence
showed that at least one reason for his non-selection was the division’s “lack of diversity,” and
one of the selected candidates was specifically chosen “because [of] diversity.” Id. (alteration in
original). Ultimately, this proved enough to frustrate the employer’s burden to demonstrate that
race was not a factor in the employment decision. Id. at *5. Suffice it to say that using “diversity”
to favor one demographic or another, with or without a formalized program, can constitute
unlawful discrimination.

Of course, liability will also depend on whether a particular initiative fits any of the limited
exceptions under Title VII and the TCHRA. See, e.g., TEX. LAB. CODE § 21.119 (“Bona Fide
Occupational Qualification”); 42 U.S.C. § 2000e-2(e) (referencing the same), (i) (permitting
preferential treatment to individuals who are “Indian[s] living on or near a reservation”). The
TCHRA narrowly sanctions “consideration of race and other protected classes when ‘combined
with objective job-related factors to attain diversity in the workplace.’” Democratic Sch. Rsch.,
Inc. v. Rock, 608 S.W.3d 290, 309 (Tex. App.—Houston [1st Dist.] 2020, no pet.) (quoting TEX.
LAB. CODE § 21.125(a)); see also Hadnot v. Lufkin Indep. Sch. Dist., 690 S.W.3d 777, 787 (Tex.
App.—Tyler 2024, pet. denied) (referring to this as an “exception” to establishing an unlawful
employment practice). It also states that “[a]n employer does not commit an unlawful employment
practice by developing and implementing personnel policies that incorporate work force diversity
programs.” TEX. LAB. CODE § 21.121. Critically, however, these exceptions cannot be taken to
swallow the rule; they merely endorse the pursuit of diversity that does not effect actual
discrimination against other, protected demographics. See, e.g., Kokes v. Angelina Coll., 148
S.W.3d 384, 391 n.5 (Tex. App.—Beaumont 2004, no pet.) (citing Grutter and Gratz as
background for section 21.121, which correctly signals that limitations to a “diversity” justification
exist). Any broader reading would impugn the constitutionality of both provisions.
Similarly, an employer who undertakes an action “in good faith, in conformity with, and
in reliance on any written interpretation or opinion of the” EEOC may limit his liability. 42 U.S.C.
§ 2000e-12(b). This extends to the EEOC’s regulations, which, at present, establish a limited
exception for voluntary affirmative action plans that meet certain criteria. See 29 C.F.R.
§ 1608.1(d); see also id. § 1608.4(b)(3) (establishing a reasonable basis for action if employment
practice results in disparate treatment). See generally id. §§ 1608.1–.12. But the Fifth Circuit has
recognized that private employers can pursue plans designed to eliminate
“manifest . . . imbalances in traditionally segregated job categories” without violating Title VII.
Sharkey v. Dixie Elec. Membership Corp., 262 F. App’x 598, 603, 608 (5th Cir. 2008). To this
end, the court examined whether a plan “unnecessarily trammel[ed] the interests of” nonminorities
by requiring “the discharge of [nonminority] workers” and replacing them with a minority
“hiree[],” creating an “absolute bar to the advancement of [nonminority] employees” that goes far
beyond a “temporary measure.” Id. at 604 (quoting United Steelworkers of Am. v. Weber, 443 U.S.
193, 208 (1979)).
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ii. Hostile work environments under Title VII and the TCHRA

In addition to the unlawful employment practices described above, both Title VII and
TCHRA also impose liability for a hostile work environment—that is, “[a] workplace
environment . . . [that] is permeated with discriminatory intimidation, ridicule, and insult that is
sufficiently pervasive to alter the conditions of the victim’s employment.” Alief Indep. Sch. Dist.
v. Brantley, 558 S.W.3d 747, 757 (Tex. App.—Houston [14th Dist.] 2018, pet. denied) (TCHRA);
see Hanna v. Dangshan Cutlery Co., 767 F. Supp. 3d 384, 389 (W.D. Tex. 2025) (Title VII, with
slight wording differences). DEI training programs, at a minimum, invite such risk.

A hostile work environment claim under Title VII requires a showing that: (1) the plaintiff
“belongs to a protected group;” (2) she “was subjected to unwelcome harassment;” (3) “the
harassment complained of was based on” her protected status; (4) “the harassment complained of
affected a term, condition, or privilege of employment;” and (5) “the employer knew or should
have known of the harassment in question and failed to take prompt remedial action.” Ramsey v.
Henderson, 286 F.3d 264, 268 (5th Cir. 2002). This last element does not apply if an employee
complains of harassment by a supervisor. Poulos, 2023 WL 7134974, at *12; Hale v. Tex. Dep’t
of Crim. Just., No. 7:18-CV-097-M-BQ, 2019 WL 7500593, at *5 n.13 (N.D. Tex. Dec. 3, 2019).
“For harassment to alter the conditions of a person’s employment, ‘the conduct complained of
must be both objectively and subjectively offensive.’” Price, 88 F.4th at 1066 (quoting EEOC v.
WC&M Enters., 496 F.3d 393, 399 (5th Cir. 2007)). This is determined by the totality of the
circumstances and considers “the frequency of the discriminatory conduct;” “its severity;”
“whether it is physically threatening or humiliating, or merely an offensive utterance;” and
“whether it unreasonably interferes with an employee’s work performance.” Id. The TCHRA
follows the same approach. See, e.g., Poulos, 2023 WL 7134974, at *12.

Certainly, simply “[r]equiring all employees to undergo diversity training does not amount
to abusive conditions.” Norgen v. Minnesota Dep’t of Human Servs., No. CV 22-489 ADM/TNL,
2023 WL 35903, at *4 (D. Minn. Jan. 4, 2023); see also Young, 94 F.4th at 1253 n.4 (“[M]erely
discussing ‘the influence of racism on our society does not necessarily violate federal law.’”
(quoting De Piero v. Pa. State Univ., 769 F. Supp. 3d 329, 357 (E.D. Pa. 2025)). “But ‘the way
these conversations are carried out matters.’” 52 Young, 94 F.4th at 1253 n.4 (quoting De Piero,
769 F. Supp. 3d at 424); cf. Chislett, 157 F.4th at 191 (explaining that implicit bias trainings are
not “per se racist,” but “[w]hat matters is . . . the way the trainings [are] conducted”). Indeed, “race-
based training programs can create hostile workplaces [under Title VII] when official policy is
combined with ongoing stereotyping and explicit or implicit expectations of discriminatory
treatment.” Young, 94 F.4th at 1253; cf. Chislett, 157 F.4th at 188 (commenting that a “mosaic” of
evidence that included “[n]egative generalizations and stereotypes” about a particular race could
lead to “a rational juror . . . find[ing] that [plaintiff] experienced a racially hostile work

52
Some courts have concluded that particular DEI trainings did not create a hostile workplace environment.
See, e.g., Young v. Colo. Dep’t of Corr., 94 F.4th 1242, 1254 (10th Cir. 2024); Sw. Bell Tel., L.P. v. Edwards, No. 05-
09-00606-CV, 2011 WL 3672288, at *12 (Tex. App.—Dallas Aug. 23, 2011, no pet.); De Piero, 769 F. Supp. 3d at
357; Diemert v. City of Seattle, 776 F. Supp. 3d 922, 941 (W.D. Wash. 2025). But this serves only to highlight the
reality that the associated inquiry is almost always fact dependent.
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environment” under a Section 1983 claim). The Tenth Circuit acknowledged as much when
confronted with rhetoric that included warnings regarding “exclusionary ‘white norms,’”
criticisms of “white exceptionalism” and “fakequity” beliefs that “white allies are an exception to
white racism.” Young, 94 F.4th at 1250–51 (observing that this was “well on the way to arriving
at objectively and subjectively harassing messaging,” if not “already at the destination”).
Unsurprisingly, others have observed similarly. See, e.g., De Piero, 769 F. Supp. 3d at 424
(highlighting federal liability that comes with diversity training that talks about any race “with a
constant drumbeat of essentialist, deterministic, and negative language”); Hartman v. Pena, 914
F. Supp. 225, 227–30 (N.D. Ill. 1995) (concluding gender-driven rhetoric and exercises during a
mandatory, three-day cultural workshop were objectively and subjectively hostile).

This is all to say that the nature of so-called DEI trainings can, and often do, “set[] the stage
for actionable misconduct by the organizations that employ them.” Young, 94 F.4th at 1253.
Whether a particular DEI training creates a hostile work environment will ultimately depend on
“content, implementation, or context.” Diemert, 776 F. Supp. 3d at 938–41; accord EEOC, What
You Should Know About DEI-Related Discrimination at Work, supra (embracing this position).
But there can be no claim that employers are free to infuse the workplace with discriminatory
rhetoric under the guise of teaching “diversity.”

iii. Section 1981 liability

Section 1981 provides yet another point of liability for DEI practices that betray the equal
“right . . . to make and enforce contracts.” 42 U.S.C. § 1981(a). This watershed statute applies to
private parties—including contracts with customers and independent contractors, 53 see, e.g.,
Crosby v. Kilgore, 9 F.3d 104 (5th Cir. 1993); Standifer v. Tom Thumb Store, No. 3:22-CV-2088-
M-BK, 2024 WL 816261, at *3 (N.D. Tex. Feb. 1, 2024)—and protects against intentional racial
discrimination in “the making, performance, modification, and termination of contracts” as well
as “the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.”
Id. § 1981(b); see also Gen. Bldg. Contractors Ass’n v. Pennsylvania, 458 U.S. 375, 391 (1982).

A plaintiff may make a claim under Section 1981 if “he has (or would have) rights under
the existing (or proposed) contract that he wishes ‘to make and enforce.’” Domino’s Pizza, Inc. v.
McDonald, 546 U.S. 470, 479–80 (2006). This requires “the loss of an actual, not speculative or
prospective, contract interest” in the retail context. Arguello v. Conoco, Inc., 330 F.3d 355, 358
(5th Cir. 2003) (quoting Morris v. Dillard Dep’t Stores, Inc., 277 F.3d 743, 752 (5th Cir. 2001)).
As for proposed contracts, on the other hand, a person must have been “actually prevented” and
“not merely deterred[].” Id. at 358–59 (quoting Morris, 277 F.3d at 752) (emphasis removed).
Courts recognize a prima facie case under this provision if a plaintiff shows that: (1) he is a member
of a “protected class,” (2) the defendant “intended to discriminate on the basis of” that protected
class, and (3) “the discrimination concerned one or more of the activities enumerated in the

53
The statute also applies to employment contracts and racial discrimination claims resulting therefrom. See,
e.g., Brown v. Old Dominion Freight Line, Inc., No. 21-60608, 2022 WL 313797, at *1–2 (5th Cir. Feb. 2, 2022); see
also Williams v. Waste Mgmt., Inc., 818 F. App’x 315, 325 (5th Cir. 2020).
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statute.” 54 Abdallah v. Mesa Air Group, Inc., 83 F.4th 1006, 1013 (5th Cir. 2023). Discrimination
can be shown by disparate treatment and, as a result, the Title VII analysis proves equally relevant
to Section 1981 claims. Id. at 1013 n.5; see also, e.g., Comcast Corp. v. Nat’l Ass’n of African
Am.-Owned Media, 589 U.S. 327, 341, 336–38 (2020) (highlighting parity in the but-for causation
standard).

Corporate DEI initiatives that shape contracting efforts to the pursuit of racial
representation face liability on this backdrop. Indeed, the Eleventh Circuit recently confirmed this
reality in Am. All. for Equal Rts. v. Fearless Fund Mgmt., LLC, 103 F.4th 765 (11th Cir. 2024).
The case arose from a lower court’s refusal to enjoin a venture fund competition that was only
open to businesses owned by black women. Id. at 769–70. Reversing, the court recognized the
competition was a “contract” under Section 1981 and rejected the propriety of categorically barring
non-black applicants—correctly characterizing this as “discriminati[on] on the basis of race.” Id.
at 775–79. Section 1981 thus has profound implications for many DEI initiatives: Liability could
be triggered anytime an applicant is denied a job, internship, fellowship, or promotion based on
race in addition to situations when an individual is treated unequally based on race in the “benefits,
privileges, terms, and conditions of the contractual relationship.” 42 U.S.C. § 1981(b). This
protection not only reaches the aforementioned DEI training, resource groups, advancement
opportunities, and compensation programs but likewise extends to supplier relationships that may
themselves be impacted by diversity goals.

iv. Federal and state securities liability

The foregoing liabilities under Title VII, the TCHRA, and Section 1981 raise independent
concerns under state and federal securities laws, particularly where risk of antidiscrimination
lawsuits and customer backlash are not acknowledged to investors. Likewise, financial advisors,
who owe fiduciary duties to their clients, must be careful to place their clients’ profits over
ideological goals. Simply put, when corporations and financial advisors prioritize social
engineering over shareholder or investor profits—they do so at great peril. DEI policies and
campaigns must be adequately disclosed to investors, along with the inherent risks of those
programs.

Two key federal securities frameworks include the Securities Act of 1933 and the
Securities Exchange Act of 1934. See generally 15 U.S.C. §§ 77a–77aa (1933 Act), §§ 78a–78rr
(1934 Act). Likewise, the Texas Securities Act is key in the state securities space. See generally
TEX. GOV’T CODE §§ 4001.001–4008.105. Each of these serve to protect investors. See id.
§ 4001.002(a)(1); Cal. Pub. Emps.’ Ret. Sys. v. ANZ Sec., Inc., 582 U.S. 497, 501–02 (2017)
(recognizing the 1933 Act’s purpose); All. for Fair Bd. Recruitment v. Sec. & Exch. Comm’n, 125
F.4th 159, 169 (5th Cir. 2024) (same, for the 1934 Act). To achieve this, both federal and state

54
Although the Fifth Circuit has consistently referred to membership of a “racial minority” in the first
element, see, e.g., Body by Cook, Inc. v. State Farm Mut. Auto. Ins., 869 F.3d 381, 386 (5th Cir. 2017), the U.S.
Supreme Court has long interpreted this provision to extend to discrimination “against whites,” McDonald v. Santa
Fe Trail Transp. Co., 427 U.S. 273, 286–87 (1976). To be sure, the Supreme Court based its reasoning on the statutory
language and history of Section 1981. See id.
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frameworks require “full and fair disclosure of all relevant information concerning securities
offered to the public.” Sec. & Exch. Comm’n v. Nat’l Bankers Life Ins. Co., 334 F. Supp. 444, 455
(N.D. Tex. 1971), aff’d, 477 F.2d 920 (5th Cir. 1973) (concerning the 1933 and 1934 Acts);
Bridwell v. State, 804 S.W.2d 900, 906 (Tex. Crim. App. 1991) (en banc) (concerning the Texas
Securities Act). Such disclosure enables investors to make informed investment decisions. See,
e.g., 15 U.S.C. §§ 77aa (registration statements), 77j (prospectuses), 78m (issuer information,
documents, and reports); TEX. GOV’T CODE § 4003.052 (registration statements of securities
registered by notification).

Federal securities law prioritizes this disclosure to combat fraud. See Nat’l Bankers Life
Ins. Co., 334 F. Supp. at 455. For example, Section 17(a) of the 1933 Act, Section 10(b) of the
1934 Act, and Rule 10b-5, together generally prohibit deceptive practices in the purchase, offer,
or sale of securities. See 15 U.S.C. §§ 77q(a), 78j(b); 17 CFR § 240.10b-5; see also Sec. & Exch.
Comm’n v. World Tree Fin., L.L.C., 43 F.4th 448, 460 (5th Cir. 2022) (recognizing that Section
17(a) targets “‘substantially the same’ conduct as Section 10(b) and Rule 10b-5” (quoting SEC v.
Spence & Green Chem. Co., 612 F.2d 896, 903 (5th Cir. 1980))). Though there are differences
between these frameworks, see, e.g., World Tree Fin., 43 F.4th at 459–60, these provisions cover
both untrue statements of material facts and omissions of material facts when those facts are
“necessary . . . to make the statements made, in light of the circumstances under which they were
made, not misleading,” 15 U.S.C. § 77q(a)(2); 17 C.F.R. § 240.10b-5(b). Courts have applied the
same materiality standard under Section 17(a), Section 10(b), and Rule 10b-5. That is, “[a]
misrepresentation or omission is material if there is a substantial likelihood that a reasonable
shareholder would consider it important in making an investment decision.” S.E.C. v. Evolution
Cap. Advisors, LLC, 866 F. Supp. 2d 661, 667 (S.D. Tex. 2011) (citing Basic Inc. v. Levinson, 485
U.S. 224, 224 (1988)); see also id. at 675–78; World Tree Fin., 43 F.4th at 461. “The appropriate
inquiry is whether, under all the circumstances, the statement or omitted fact is one that a
reasonable investor would consider significant in making the decision to invest, ‘such that it alters
the total mix of information available.’” Evolution Cap. Advisors, 866 F. Supp. 2d at 667 (quoting
Krim v. BancTexas Grp., Inc., 989 F.2d 1435, 1445 (5th Cir. 1993)). A violation of Section 17(a),
Section 10(b), and Rule 10b-5 could lead to criminal liability in certain circumstances. See, e.g.,
15 U.S.C. §§ 77x, 78ff(a).

The Texas Securities Act also seeks to protect against fraud. See Bridwell, 804 S.W.2d at
906. The Act contains several provisions that provide remedies for “fraud or fraudulent practice,”
which is statutorily defined to include “misrepresentation[s] of a relevant fact” and “an intentional
failure to disclose a material fact.” TEX. GOV’T CODE § 4001.058(a)(1), (3). For example, the
securities commissioner may assess an administrative fine against a person or company who was
found to have “engaged in fraud or a fraudulent practice” in certain circumstances. Id.
§ 4007.106(a)(1); see also, e.g., id. §§ 4007.102 (relating to cease and desist orders of an
investment adviser concerning fraud or a fraudulent practices), 4008.101(b)–(c) (concerning civil
liability of an investment adviser or representative “who commits fraud or engages in a fraudulent
practice in rendering services”). Criminal liability may also arise for a person who, in connection
with the sale of securities and other dealings, “engages in any fraud or fraudulent practice.” Id.
§ 4007.203(a)(1)(A), (a)(2)(A). Liability can also be incurred in certain circumstances where a
person instead makes “an untrue statement of material fact or omits to state a material fact
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necessary in order to make the statements made, in light of the circumstances under which they
are made, not misleading.” See id. § 4007.203(a)(1)(C) (imposing criminal liability); see also, e.g.,
id. § 4008.052(a) (concerning civil liability for a similar action). When considering the materiality
of an omitted fact under these provisions, Texas courts have applied the same materiality standard
as that applicable to Section 17(a), Section 10(b), and Rule 10b-5. See, e.g., Bridwell, 804 S.W.2d
at 904; Villarreal v. State, 504 S.W.3d 494, 509–10 (Tex. App.—Corpus Christi–Edinburg 2016,
pet. ref’d); Hays v. State, 370 S.W.3d 775, 782 (Tex. App.—Texarkana 2012, no pet.).

It follows that omissions or misstatements about liability risks from DEI initiatives could
distort an investor’s evaluation of a company’s risk profile and expected financial performance,
leading to poor investment decisions and financial losses, and violations under federal securities
law, state securities law, or both. DEI initiatives, for example, may expose companies to liability
under civil rights laws, such as Title VII, TCHRA, and Section 1981. See supra Part II.B.2.i–iii.
Such exposure includes administrative actions, civil suits, monetary damages, and injunctive relief.
See, e.g., 42 U.S.C. §§ 1981a(b), (b)(4), 2000e-5(b), (f)(1), (g)(1), (g)(2)(B); TEX. LAB. CODE
§§ 21.125(b), .204, .206, .251, .254, .258, .2585.

Other risks can result from incorporating DEI initiatives that could require disclosure, as
one Florida district court acknowledged. Craig v. Target Corp., No. 2:23-CV-599-JLB-KCD,
2024 WL 4979234, at *1 (M.D. Fla. Dec. 4, 2024). There, a company’s DEI-linked marketing
campaign triggered customer backlash, boycotts, reduced sales, and stock price declines. Id. The
plaintiffs asserted that the company misled investors by either falsely stating or omitting the risk
of the boycotts in a number of statements, including within the company’s annual reports. Id. The
court denied the motion to dismiss for a number a reasons, see id. at *3–14, 16, but notably, the
court found that the “general warning in [the company’s] risk disclosures” was potentially
“materially misleading because it was not specifically tailored” to the DEI campaign’s particular
risks. Id. at *5. The court also highlighted a difference between a disclosure warning of risks from
failing DEI objectives and disclosure of risks from implementing such objectives. Id. at *6. It
further determined that the plaintiffs adequately alleged incomplete risk disclosures. 55 Id. at *7. At
bottom, corporations failing to disclose (or misstating) the risks that their DEI initiatives create
could lead to violations of federal and state securities law.

Investment advisors must also be careful not to prioritize DEI over investor profits. The
Investment Advisers Act of 1940, which aims to “prevent fraudulent practices by investment
advisers,” recognizes investment advisers as fiduciaries towards their clients. Sec. & Exch.
Comm’n v. Cap. Gains Rsch. Bureau, Inc., 375 U.S. 180, 191–92, 195 (1963); see also Nat’l Ass’n
of Private Fund Managers v. Sec. & Exch. Comm’n, 103 F.4th 1097, 1103 (5th Cir. 2024); 15
U.S.C. § 80b-6. As part of that relationship, an investment adviser owes his clients a duty of care
and loyalty. See In re Highland Cap. Mgmt., L.P., No. 3:23-CV-1503-B, 2024 WL 4139647, at *5
(N.D. Tex. Sept. 10, 2024); see also IA–5248, 84 Fed. Reg. 33669, 33671 (July 12, 2019).
Advisors are thus “to provide investment advice that is in the client’s best interest” and disclose
conflicts of interests. Sec. & Exch. Comm’n v. Duncan, No. 3:19-CV-11735-KAR, 2021 WL

55
The court disagreed the risk warnings were inactionable, forward-looking statements because of pleaded
facts showing they were knowingly false and misleading. Craig, 2024 WL 4979234 at *8.
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4197386, at *9–12 (D. Mass. Sept. 15, 2021); see also IA–5248, 84 Fed. Reg. 33669, 33669, 33671
(July 12, 2019). This involves making investment decisions that consider the client’s risk tolerance
and “investment profile,” consisting of “the client’s financial situation, level of financial
sophistication, investment experience, and financial goals.” Duncan, 2021 WL 4197386 at *12
(citing to IA-5248, 84 Fed. Reg. 33669, 33672–674 (July 12, 2019)). Under the Act, Congress
sought to also “eliminate, or at least expose, all conflicts of interest” that might incline an advisor
“to render advice which [is] not disinterested.” Cap. Gains Rsch. Bureau, Inc., 375 U.S. at 191–
192; see also IA–5248, 84 Fed. Reg. 33669, 33675–678 (July 12, 2019).

Texas law also recognizes that investment advisers owe fiduciary duties to their clients.
See, e.g., Izzo v. Izzo, No. 03-09-00395-CV, 2010 WL 1930179, at *7 (Tex. App.—Austin May
14, 2010, pet. denied) (recognizing investment advisers as fiduciaries); Tex. State Sec. Bd., In the
Matter of the Investment Adviser Representative Registration of Clifton Wayne Myers, Order
No. IC23-SUS-01 at 4 & n.3 (Jan. 20, 2023) (same). Indeed, state administrative orders have made
clear that financial advisors are “subject to heightened standards of loyalty and care.” Tex. State
Sec. Bd., In the Matter of the Investment Adviser Representative Registration of Clifton Wayne
Myers, Order No. IC23-SUS-01 at 4 n.3. These standards include, “the duty to act in good faith
and not allow personal interests to prevail; . . . the duty to avoid misleading clients; and the duty
to provide full and fair disclosure to clients.” Id.; see also, e.g., Tex. State Sec. Bd., In the Matter
of the Investment Adviser Registration of Queen B Advisors, LLC and the Investment Adviser
Representative Registration of Brooklynn Chander Willy, Order No. REG20-SUS-04 at 5 (Oct. 16,
2020) (finding that an investment adviser representative owes “duty to clients to have a reasonable
basis to believe that an investment or investment strategy was appropriate for the client given their
financial profile, investment objectives, and risk tolerance”). Thus, advisers who incorporate DEI
factors—such as racial or demographic preferences—into investment advice could risk breaching
these fiduciary obligations if they disregard a client’s investment profile or prioritize their own
policies or commitments over their client’s interests. Cf. Duncan, 2021 WL 4197386 at *10–12
(finding an adviser breached his fiduciary duties where he did not disclose a personal interest in
an investment and ignored his client’s investment profile when directing funds).
- Page 74

S U M M A R Y

Our nation was founded on the radical notion that all are
created equal. Though we have often failed to live up to that
promise, it remains as a constitutional lodestar—both in the U.S. and
Texas Constitutions. The race- and sex-based, public sector
preferences discussed in this opinion cannot survive strict scrutiny
and are therefore unconstitutional. Furthermore, a large body of DEI
practices in the private sector triggers liability under Title VII, the
Texas Commission on Human Rights Act, and Section 1981 in
addition to state and federal securities law.

Very truly yours,

KEN PAXTON
Attorney General of Texas

BRENT WEBSTER
First Assistant Attorney General

RALPH MOLINA
Deputy First Assistant Attorney General

LESLEY FRENCH
Chief of Staff

D. FORREST BRUMBAUGH
Deputy Attorney General for Legal Counsel

JOSHUA C. FIVESON
Chair, Opinion Committee

MICHAEL COTTON
Assistant Attorney General, Opinion Committee