A federal judge in Houston has struck down the race-based aspects of two local contracting programs intended to remedy past discrimination as unconstitutional. The City of Houston’s program set goals for the percentage of contracts awarded to minority-owned businesses and allowed departments to impose contract-specific percentage requirements on non-minority-owned businesses. Non-minority-owned businesses were required to meet those contract-specific percentages by subcontracting with minority-owned businesses, whereas minority-owned businesses were free to self-perform with their own workers. The City of Houston had discretion to excuse a failure to meet the contract-specific percentages if the contractor made a good faith effort to meet them. The penalty for failure to comply with the contract-specific goals was debarment from all Houston public contracts for five years. The other program at issue, run by the Midtown Management District, gave minority-owned businesses up to a 10-point preference out of a 100-point scale in the bidding process for public contracts.

Two non-minority-owned businesses brought suit to enjoin the programs claiming that they improperly discriminated on the basis of race in violation of the Equal Protection Clause of the 14th Amendment. The court conducted a four-day bench trial last year and issued its 39-page ruling last week. The court found no evidence that the programs were aimed at redressing specific instances of prior discriminatory conduct in public contracting by the governing bodies. As the court observed, “generally remediating past discrimination in a particular industry or region, or the effects of societal discrimination” is not enough to pass constitutional muster. The court rejected the governing bodies’ argument that the U.S. Supreme Court’s landmark decision striking down Harvard’s affirmative action program be limited to the higher education context, noting that the high court had just recently extended the Harvard ruling to cases involving alleged racial gerrymandering.  The court found that the plaintiffs had standing, had satisfied the elements for a permanent injunction, and were entitled to an order prohibiting the governing bodies from enforcing the racial aspects of the programs at issue.

The case is Landscape Consultants of Texas, Inc. v. City of Houston, No. H-23-3516, 2026 WL 2170880 (S.D. Tex July 28, 2026), and a full copy of the court’s opinion is available here. The City of Houston and Midtown Management District are reportedly evaluating a potential appeal.