The Justice Department argued in the filing that the city appeared to be targeting religious conduct by singling churches out as the only essential service (as designated by the state of Mississippi) that may not operate despite following all Centers for Disease Control and Prevention and state recommendations regarding social distancing.
The SBA’s restriction against funding businesses engaged in activities of a “prurient sexual nature” dates from the Clinton administration. A proposal to add the restriction says the SBA has an obligation to direct its limited resources toward businesses it considers to be in the public interest, and that it is within its rights to exclude strip clubs and shops that sell porn because “obscene” speech is not protected by the first amendment.
Free speech lawyers argue, though, that the SBA is wrong. They don’t dispute that businesses engaged in “obscene” and “prurient” activities could be excluded from getting the money, but they say those labels don’t apply to most businesses in the adult industry.