Four States Face Allegations of Violating Federal Anti-Discrimination Contracting Rules

What's happening

The Wisconsin Institute for Law & Liberty (WILL) has filed a formal complaint accusing New York, Massachusetts, Maryland, and Indiana of violating federal law by continuing to enforce race-based contracting policies. These allegations come in the wake of a permanent injunction issued last fall by the Department of Transportation (DOT) under the Trump administration, which aimed to end race- and sex-based preferences in federally funded infrastructure projects. Despite these federal directives, the complaint claims these states persist in implementing programs that discriminate based on race and gender in awarding contracts.

The core of the dispute centers on Minority Business Enterprise (MBE) programs that set specific racial and gender quotas for contract awards. Critics argue these programs unfairly exclude non-minority business owners, particularly white males, from competing on an equal footing. The complaint contends that such policies violate the Civil Rights Act by imposing racial classifications and preferences that are no longer permissible under federal law. WILL represents Contractors for Equal Opportunity CEO, a coalition of businesses that say they have been harmed by these practices.

In October 2025, the DOT issued an Interim Final Rule (IFR) that removed race- and sex-based presumptions from the federal Disadvantaged Business Enterprise (DBE) programs. This rule effectively ended longstanding set-aside programs that had guaranteed a percentage of contracts to minority- and women-owned businesses on federally funded projects. The Trump administration’s Department of Justice also found these programs unconstitutional, leading to the elimination of a multi-billion dollar set-aside program that had been in place for 45 years. These federal changes were designed to ensure contracting decisions are made without regard to race or gender.

Despite these federal reforms, WILL’s complaint alleges that the four states named have continued to enforce race-based goals on certain projects, including some funded solely with state money. For example, New York’s Department of Transportation is accused of advertising contracts with MBE goals, while Massachusetts recently required that eight percent of contracts for a pavement project be awarded to minority- and women-owned businesses. Maryland reportedly sets a minimum five percent minority business goal for major highway and tunnel projects, and Indiana allegedly imposes quotas of seven percent for minority-owned and three percent for women-owned businesses on highway contracts, including those involving federal repairs.

What's at stake

Daniel Lennington, vice president and deputy counsel for WILL, stated that some states appear to believe that because certain projects are funded entirely with state tax dollars, the federal IFR does not apply. However, he emphasized that states cannot sidestep federal anti-discrimination laws simply by using state funds. This legal argument highlights the tension between federal civil rights mandates and state-level contracting policies that seek to maintain race- and gender-based preferences.

The states named in the complaint have not issued public responses to the allegations, and a DOT official declined to comment when asked for clarification. The dispute raises important questions about the future of affirmative action and diversity programs in state contracting, especially as some states appear to resist federal efforts to eliminate race- and sex-based preferences. The outcome of this legal challenge could have wide-reaching implications for how states structure their contracting policies and comply with federal civil rights laws.

The stakes are significant for businesses that compete for public contracts, as well as for government agencies responsible for enforcing anti-discrimination laws. If the complaint succeeds, it may lead to stricter enforcement of federal rules and require states to revise or abandon their MBE programs. Conversely, if states prevail, it could embolden other jurisdictions to maintain or expand race- and gender-based contracting preferences, potentially leading to further legal conflicts.

Looking ahead, the case is likely to proceed through the courts, where judges will need to interpret the scope of federal anti-discrimination laws in relation to state contracting practices. Observers will be watching closely to see whether the states adjust their policies voluntarily or face court orders to comply with the DOT’s IFR. The timeline for resolution could extend over months or years, with potential appeals and further regulatory action. This case underscores ongoing national debates about affirmative action, equal opportunity, and the role of government in addressing historic disparities.

Why it matters

The complaint alleges that four states are violating federal anti-discrimination laws by continuing race-based contracting policies. Federal rules issued in October 2025 eliminated race- and sex-based presumptions in Disadvantaged Business Enterprise programs. WILL represents businesses claiming harm from these state policies, arguing they discriminate against non-minority owners.

Some states are reportedly using state funds to maintain race-based contracting goals despite federal prohibitions. The legal challenge could reshape how states implement minority business programs and comply with federal civil rights laws.

Key facts & context

The Trump administration’s Department of Transportation issued a permanent injunction last fall to end race- and sex-based contracting preferences in federally funded projects. In October 2025, the DOT published an Interim Final Rule removing race- and sex-based presumptions from federal DBE programs. WILL filed the complaint on behalf of Contractors for Equal Opportunity CEO, an organization representing businesses affected by these policies.

New York, Massachusetts, Maryland, and Indiana are accused of imposing minority business goals on various transportation projects. Massachusetts required eight percent of contracts for a pavement project to go to minority- and women-owned businesses. Maryland sets a minimum five percent minority business goal for major highway and tunnel projects.

Indiana allegedly requires seven percent of contracts to minority businesses and three percent to women-owned businesses on highway projects. The states have not publicly responded to the allegations, and DOT officials declined to comment. The legal dispute highlights tensions between federal civil rights mandates and state contracting policies.

The outcome could affect future enforcement of anti-discrimination laws and the structure of state minority business programs.

Timeline & key developments

2026-03-19: Four States Accused of Violating Federal Anti-Discrimination Order. Additional reporting on this topic is available in our broader archive and will continue to shape this timeline as new developments emerge.

Primary sources

• justice.gov document
• transportation.gov document
• transportation.gov document

Further reading & references

• (Additional background links will appear here as we cover this topic.)