Bonds feature in Texas AG's legal opinion against MWBE programs

In a sweeping legal opinion, Texas Attorney General Ken Paxton said state and local government laws or practices giving preferences based on sex or race, including ones for minority- and women-owned business enterprise participation in bond contracts, are unconstitutional.

The opinion released on Monday's Martin Luther King Jr. federal holiday cites several examples of what Paxton said are now-unlawful practices, noting percentage goals for MWBE participation "are especially prevalent in bond issuance contracts."

Paxton said the dismantling of diversity, equity, and inclusion in Texas helps fulfill the civil rights leader's vision to judge people based on character, merit and qualifications.

"It's imperative that all private-sector employers, schools, and state and local government entities?based on this legal opinion?immediately abolish any DEI, affirmative action, or unconstitutional discrimination programs under their authority," the Republican, who is running for U.S. Senate, said in a statement. "We must return to the basic principles of equal opportunity for all."

The opinion and the press release announcing it took swipes at John Cornyn, the incumbent Paxton is challenging in the March 3 GOP Senate primary, criticizing guidance he issued as attorney general in 1999.

"Was this bogus 'opinion' an illegal, in-kind contribution to his campaign?" Cornyn said in a social media post. "Inquiring minds (and the Federal Election Commission) want to know."

Paxton called the opinion "the most wide-sweeping, binding legal document" since the U.S. Supreme Court's 2023 decision ending affirmative action in higher education.

Texas attorney general opinions are not binding, have no force and effect of law, and are merely advisory, according to Randall Erben, an adjunct professor at the University of Texas at Austin law school, adding that unlike 99% percent of opinions "written in response to a request from one of the people authorized to request them" this one originated with Paxton himself.

"Courts have stated that attorney general opinions are highly persuasive and are entitled to great weight; however, the ultimate determination of a law's applicability, meaning or constitutionality is left to the courts," the attorney general's office says on its own website.

The attorney general's office "will continue to investigate and hold accountable any school district, local governmental entity, state agency, or program that attempts to use DEI or affirmative action as a guise for unlawful discrimination, ideological coercion, or the erosion of merit-based decision-making," according to the statement.

The Texas Bond Review Board will no longer require state bond issuers "to make a good faith effort to achieve 33% participation by historically underutilized business firms in the underwriting and issuance of debt," Executive Director Robert Latsha said on Tuesday.

Some local governments have set participation goals for MWBE underwriters, bond counsel, and financial advisors for their debt issuances.

Houston "selects underwriters, bond counsel, and financial advisors based on qualifications, performance, and value to taxpayers ? nothing more, nothing less," said City Controller Chris Hollins.

"Increasing diversity does not mean lowering the standard for performance ? high performance is best achieved through broad, stable competition," he said in a statement. "When governments narrow the pool of qualified firms or inject uncertainty into procurement rules, competition weakens, risk increases, and costs ultimately rise for taxpayers."

The opinion follows action taken by the state's Acting Comptroller Kelly Hancock in December removing MWBEs from preferences for state contracts under a renamed Historically Underutilized Business program that focuses exclusively on veteran-owned and operated businesses.

Paxton said programs and policies for veteran-owned businesses are exempt from the opinion.