Congress Built It. They Gutted It: The Fight Over the Minority Business Development Agency
The federal government has a slick way of killing something without admitting it killed anything: keep the name, remove the workers, stop the grants and call the shell an agency.
That is the move a federal appeals court examined on September 16 in State of Rhode Island v. Trump. The case involves three congressionally created bodies: the Minority Business Development Agency, the Federal Mediation and Conciliation Service and the U.S. Interagency Council on Homelessness.
The one Black business owners should watch closely is the Minority Business Development Agency, or MBDA. Its job is to help minority-owned businesses reach capital, contracts and markets. In a country where access to money still comes with a long racial receipt, that is not decorative government work.
According to evidence cited during the hearing, the administration fired all or nearly all of the staff at the agencies and stopped programs and services after a March 2025 executive order directed several federal bodies to shrink to the minimum allowed by law.
The Justice Department says the administration has the right to decide the agencies’ size and scope. The states challenging the cuts say the White House functionally shut down institutions Congress created and funded.
The judges saw the trick
During oral arguments, judges on the First Circuit sounded skeptical of the administration’s position.
One judge warned that the government’s theory could let an administration avoid court review by dismantling agencies quietly. Doing it “on the down low” instead of issuing one neat document that says the agency is closed. Another stated the problem in plain English: “An agency can’t work without people.”
That is the entire contradiction.
On paper, the MBDA still exists. In practice, an agency with no workers, no grants and no services is a sign on an empty office. Congress built the institution. The executive branch tried to reduce it past the point where it could do the job.
A lower-court judge already ruled that the government failed to give a reasonable explanation for dismantling the agencies and crossed the constitutional line between presidential management and congressional power. The administration appealed. The First Circuit has not yet issued its final decision, so the judges’ questions are not a ruling.
Still, questions matter when they expose the hustle.
Black business has heard “figure it out yourself” before
The MBDA’s roots go back to 1969, when the federal government created an office focused on minority enterprise. Congress made the MBDA permanent in 2021 through the Minority Business Development Act.
That history matters because Black entrepreneurs have never operated in a clean free market. Banks denied credit. Government contracts traveled through old networks. Valuable property got redlined, under-appraised or stripped away. Then somebody looked at the wealth gap and acted surprised.
The MBDA was never a magic wand. It was an acknowledgment that “equal opportunity” means little when the doors to capital, procurement and expansion do not open equally.
Removing the agency’s people does not remove those barriers. It removes one of the few federal offices assigned to help businesses push through them.
What remains unknown
The appeals court has not ruled. It could uphold the lower court, reverse it or issue a narrower decision. The administration also previously dropped the part of its appeal involving the Institute of Museum and Library Services, but it is still fighting over the other three agencies.
So this is not a victory lap. It is a live warning.
If a president can erase a congressionally created agency by emptying the building, the law becomes a prop. And Black businesses have seen enough “support” that disappears the minute it requires staff, money or power.
Sources: Reuters report on the September 16 oral argument; Constitutional Accountability Center case page; First Circuit case information; Rhode Island Attorney General case overview