DEI initiatives are getting hammered into oblivion, and they’re now on the chopping block for federal infrastructure spending. This October, two firms operating outside of Michigan flipped the landscape of road construction in 23 states, and possibly nationwide, when they won a favorable injunction in Kentucky.
The case, Mid-American Milling v. U.S. Department of Transportation, remains unresolved and is likely headed to appeals court, but shockwaves are already being felt throughout the nation, including in Michigan where state agencies keep a close eye on racial and gender equity.
The plaintiffs in the case won an injunction in U.S. District Court prohibiting the federal Disadvantaged Business Enterprise program (DBE) from using race and gender metrics when allocating funds for road and highway constructions projects.
The Transportation Department established the DBE to remedy ongoing perceived discrimination and past discrimination related to highway, transit, airport, and highway safety infrastructure projects receiving taxpayer money via contract. All construction projects under that umbrella must try to allocate 10% of their funding to businesses that qualify as disadvantaged—owned or operated by individuals of color or women.
The program is a legal minefield. Large road construction firms hire resource experts and employees for the sole role of making sure their companies and contract vendors are in compliance, lest the state punish them.
The details of the injunction are quite confusing, and the long-term effects are unknowable at this point, but the ground under the feet of Michigan’s road construction industry is shaking.
Both plaintiffs in the case are suing the Transportation Department over its use of the owner or resident agent’s race or gender when determining if the qualifying company is disadvantaged, rather than actually investigating to see if the company is economically disadvantaged. This metric, according to the plaintiffs, is unconstitutional. It’s using real racial discrimination to correct perceived racial discrimination.
The judge agreed in principle and used a very narrow-scoped injunction that pertains only to the two plaintiffs, setting up an interesting dynamic. The plaintiffs mainly bid on contracts in Indiana; however, they said they may want to bid on additional projects in other states and listed other states they may want to begin bidding in, including Michigan. Because of that, those states may now have to dismantle DBE applications on their projects.
This gets really confusing, so I reached out to a part-owner of a Metro Detroit-based company heavily involved in Michigan road infrastructure, who said the entire industry, all their partners and vendors, are stunned by the ruling and also confused.
This source told me that within days of the injunction, the current projects in Michigan waiting on bids all had DBE requirements removed. I obtained a screenshot of a December 6 Bid Letting notice indicating that 11 of the advertised projects had their DBE requirements removed.
According to my source, the wait-and-see approach within Michigan now rests on the large highway, freeway, and interstate projects. Projects of this size are massive endeavors, and only a handful of companies in Michigan have the manpower to handle them, never mind the bonding accreditation to bid on them. These companies typically handle the allocation of federal and state funds to contract vendors. That these companies may not have to deal with the DBE will benefit their bottom line and also remove regulations they have long had to manage.
Additionally, my source speculated on the future. Smaller companies that work on city streets or more isolated projects will have greater access to contracts now. Deregulation will create a more honest bidding environment. But larger companies with a bigger footprint may continue on a “business as usual” approach and find minority- or female-owned businesses to partner with on bigger projects.
My source said that companies doing projects of this size do enjoy the optics of having a diverse project workforce and that the powers that be in Lansing appreciate such optics.
But are DEI metrics and the DBE program even still needed in an economic landscape where large companies or corporations actually seek diversity, not out of a need to hurdle regulation but for self-promotion?
Gov. Whitmer has thus far made no comment on the injunction. Though she ran on a promise to “fix the damn roads,” she has found other culturally progressive policies to prioritize in office.
She appears well aware Michigan roads are in heavy decline and feeling the pressure of failing to fulfill her promises. This year, she once again proposed additional and very unpopular gas taxes, but also raised the possibility of converting several highways into toll roads.
In the Michigan Legislatures lame duck session, House Democrats introduced three bills to raise the gas tax by nearly 20 cents a gallon, increase vehicle registration fees by $100, and create a toll road authority to begin setting fees on some roadways.
While the DEI metrics in road infrastructure are being eased and dismantled in Michigan, Democrats are still hot-to-trot to inflict additional punitive taxes and fees on motorists.
J.Z. Delorean is a writer for Michigan Enjoyer and has been a Metro Detroit-based professional investigator for 22 years. Follow him on X @Stainless31.
