The anti-drug Abuse Act of 1986 was one of Congress's more notable efforts to get tough on drugs. Passed in the wake of the emotionally resonant death-by-overdose of college basketball star Len Bias, the law aimed a sledgehammer at crack-cocaine dealers. If federal prosecutors convicted you of peddling five grams of crack, you got the same five-year minimum sentence as someone dealing 500 grams of powder. Unfortunately, the law was rooted in ignorance about crack's potency, how the drug trade actually worked—and even about the cause of Bias's death. He actually died from an overdose of powder—not crack—cocaine.

Even many of the bill's architects now say it was a mistake. Last year Joe Biden apologized: "Our intentions were good, but much of our information was bad," he told a Senate subcommittee. But the law, which led to racially biased prosecutions and a misallocation of federal anti-drug resources, has stubbornly remained on the books. That may be about to change.

That prospect comes courtesy of the Obama administration, which last month announced a Justice Department review of federal sentencing policy. "This administration firmly believes that the disparity in crack- and powder-cocaine sentences is unwarranted, creates a perception of unfairness, and must be eliminated," declared Attorney General Eric Holder Jr. That is a very different view from that of the Bush administration, which supported the policy, and of the Clinton administration, which never strongly opposed it.

Why are the penalties for crack and powder so disparate? Largely because legislators were told—and believed—that small-time crack dealers were somehow on a par with big-time powder dealers, recalls Eric Sterling, former counsel to the House Judiciary Committee. There was also the notion that crack was a freakish demon drug—that it was many times more addictive, a trigger for violence, and infinitely more dangerous than powder in virtually every way. Those ideas turned out to be either false or overstated.

Since 1995 the Sentencing Commission has been trying to set things straight—partly because the law makes no sense and partly because it has hit black communities particularly hard. More than 80 percent of federal crack prosecutions are of African-Americans, despite evidence that crack use is only slightly higher among blacks than among whites or Hispanics. Congress, afraid of appearing weak on crime, has consistently rejected the commission's recommendations for reform—though, in 2007, the panel did retroactively reduce penalties for certain offenders who had received longer sentences than the statutory mandatory minimum.

The Supreme Court also has gotten into the act. In 2005 the court ruled that the sentencing guidelines were advisory, not mandatory. And in 2007 it declared that district judges could sentence criminals less harshly than the guideline's provisions. In that decision, Justice Ruth Bader Ginsburg noted the absurdity of hitting crack dealers harder than the cocaine distributors who supplied them.