Good.
A Travis County district court judge granted a request for a temporary injunction to block the latest rule changes to the state’s Historically Underutilized Business (HUB) program. The injunction reverts HUB program back to its original regulations, but the judge said her ruling only affects the six businesses that filed suit against the state.
The Honorable Amy Clark Meachum said she ruled in favor of the temporary injunction because no court in the state had voided the HUB program in its more than three decade existence, and added that no executive agency had the authority to interpret the laws passed by the legislative branch of government.
The decision comes after a group of female-owned and minority-owned businesses sued the Texas Comptroller of Public Accounts, and acting Comptroller Kelly Hancock, after the agency drastically overhauled the program late last year.
“This is a victory for the rule of law. This is a victory for the separation of powers. And this is a victory for every single small business owner in Texas who has had the courage to stand up and fight,” Alphonso David, the co-counsel for the plaintiffs, said in a news conference following the ruling.
The plaintiffs in the case argue that the Comptroller overstepped its executive authority in changing state statute and financially harmed more than 15,000 small businesses. The Texas Attorney General’s office is defending the Comptroller’s actions because they argue the HUB program violated both state and federal constitutions.
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Some of the business owners named in the lawsuit testified in court Monday to talk about the impacts of the rule changes. Ruben Mercado Jr. owns and operates a civil construction company in Houston called Ipsum General Contractors LLC. He testified that 85% of his business comes from HUB-related contracts.
Mercado, who is a veteran but not disabled, said he had to layoff 15 of his 20 employees following the changes to the HUB program. Mercado said he lost a $2 million dollar contract following the changes, although he testified he was never told why he lost the contract.
Representatives from two organizations that help minority-owned businesses also took the stand in court Monday to talk about the impact they were seeing. Margo Posey, the president of the Dallas-Fort Worth Business Council, said the changes were devastating to her small business members who had to layoff employees and were at risk of losing property.
State attorneys tried to point out during cross-examination of witnesses that no existing contracts were proven to be cancelled because of the Comptroller’s actions, and said any projections of a loss in revenue were merely presumptions.
Both sides of the issue were in agreement that the HUB program did not guarantee a company to win a publicly-funded contract. That is because state agencies are required by law to get the best value for taxpayer-funded projects. But the argument that seemed to sway judge Meachum the most was the issue of separation of powers.
State Sen. Royce West, who helped craft the bill in the 90s, also testified in court today that when the legislatures crafted the bill, they had no intention of allowing the Comptroller to change it.
“It’s law in the state of Texas,” West said in a news conference. “Today, the court upheld that law.”
Monday’s order restores the HUB program rules to what they were before Hancock’s emergency order, but only for the six plaintiffs in the case. David, the counsel for the plaintiffs, said principle of the ruling on Monday was that all executive branch officers can not rewrite laws crafted by the legislature.
David also added that he interprets the judge’s ruling to allow other companies to reapply for the HUB program since regulations are being returned back to normal.
“That means practically is that anyone who was a part of the program could effectively reapply,” David said. “They’re not prohibited from doing that and if the controller precludes them from reapplying, they create additional constitutional problems.”
See here and here for the background. According to a statement I got that was sent on behalf of the plaintiffs, the ruling included the line “It is well settled law that the executive branch enforces the law but cannot alter pre-existing law”, which is as clear as I thought it would be. The statement, which I have included beneath the fold, also says that the state is expected to appeal, and the full hearing on the merits is set for November 9. I approve of the ruling, I hope it stands up under appeal, and kudos to all who filed and argued it.
A Travis County District Court today granted a temporary injunction blocking Texas Comptroller Kelly Hancock’s recent changes to the state’s Historically Underutilized Business (HUB) program, ruling that the executive branch cannot unilaterally rewrite a law passed by the Legislature.
In her order, Judge Amy Clark Meachum of the Travis County District Court made clear that the Comptroller overstepped his authority. “It is well settled law that the executive branch enforces the law but cannot alter pre-existing law,” the court wrote.
The court further found that the Comptroller “lacks the authority to determine the constitutionality of the HUB Act” and that the rule changes would cause “immediate, irreparable injury” to affected businesses.
The ruling in Globe Express Trucking Inc., et al. v. Kelly Hancock, et al. halts enforcement of the Comptroller’s emergency regulations and restores the HUB program to its pre-December 1, 2025 status for the plaintiffs unless and until the law is changed by the Legislature or ruled unconstitutional by a court.
“This is a clear and unequivocal statement that the Comptroller violated the law,” said Alphonso David, President & CEO of the Global Black Economic Forum and co-lead counsel for the plaintiffs. “Judge Meachum affirmed what we have argued from the beginning: the executive branch cannot rewrite laws passed by the Legislature. This is a victory for the rule of law and for the thousands of businesses whose livelihoods were put at risk.”
The injunction currently applies to the six named plaintiffs, though the court acknowledged the ruling may raise broader legal questions for similarly situated businesses.
“That’s why this case matters beyond Texas,” said Adam Schuman of Petrillo Klein + Boxer LLP, co-lead counsel for the plaintiffs. “What’s at stake is whether state officials can bypass legislatures and entrench those decisions through rulemaking—and today, the court made clear the answer is no. The Comptroller violated the law, and the executive branch cannot override the Legislature.”
What’s Next
The court set a final trial for November 9, 2026, as the case continues through the legal process. Attorneys noted that the State is expected to appeal the court’s ruling, meaning the legal fight is far from over.
Plaintiffs and their supporters are encouraging businesses, advocates, and stakeholders to continue following the case closely and to support ongoing litigation efforts as they work to defend the integrity of the HUB program and the rule of law.
The Global Black Economic Forum, Freedom Economy, and American Pride Rises are supporting the litigation alongside a coalition of business and civil rights organizations.