The Small Business Administration has programs that favor “socially disadvantaged” business owners. Under the relevant law, African Americans, Hispanics, Asians (but not Asians from east of India), and members of federally-recognized tribes are presumptively socially disadvantaged. The SBA has the authority to recognize additional groups. In the late 1980s, an Iranian-American group petitioned for the SBA to recognize Iranian-Americans as presumptively socially disadvantaged, based on the hostility they face due to their skin color and hostility to Iran. The petition was denied. The SBA found that any hostility to Iranian-Americans was primarily political, and such hostility does not constitute social disadvantage within the meaning of the law:
The Small Business Act and the conference report to the 8(a) authorizing legislation, Public Law 95–507, define social disadvantage in terms of racial or ethnic prejudice or cultural bias. No mention is made of politically motivated bias being a cause for 8(a) group eligibility. See H.R.Rep. No. 1714, 95th Cong., 2d Sess. 20–23, reprinted in 1978 U.S.CODE CONG. & ADMIN.NEWS 3879, 3881–3884. Animosity toward a group of persons based on political events cannot constitute “ethnic or racial prejudice or cultural bias” within the meaning of the law. Such a posture seems reasonable when the consequences of admitting a group based on political affiliation or bias because of that affiliation are considered. If such were the case, then any group that espoused an unpopular political belief could successfully petition the SBA for minority group status. That is clearly not the intent of Public Law 95–507.
The distinction between “ethnic” and “cultural” bias and the bias faced by Iranian-Americans eludes me, and of course any “political bias” faced by Iranians is not because any particular Iranian-Americans espouses unpopular beliefs, but because of ethnic stereotypes of what Iranians are thought to believe. Nevertheless, the law of ethnic preferences is filled with arbitrary classifications, and this is just one of them.
One recurring issue is whether being of Spanish descent, by itself, is sufficient to qualify one as socially disadvantaged. Some administrative law judges have denied “Hispanic” status based on “Northern European” appearance, birth certificates designating the applicant as white, lack of fluency in Spanish, and lack of ties to the Hispanic community. Other ALJs have ruled that none of those factors may even be considered once the applicant has established that he is of Spanish descent and is therefore of “Hispanic origin” within the literal meaning of the statute.
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