A state fund meant to help Black Oregonians and Black-owned businesses navigate the COVID-19 pandemic in Oregon is seeing mounting legal pressure, even as a judge has refused to stop the state from doling out money.
On Friday, U.S. District Judge Karin Immergut rejected a request from an Eastern Oregon logging company to block new disbursements from the $62 million Oregon Cares Fund, as a lawsuit challenging the fund’s constitutionality plays out.
But another suit arose the same day — this one filed by a Mexican-American cafe owner in Portland. Both suits accuse the state of violating the 14th Amendment protections by creating a fund to benefit people of one race. The plaintiffs argue their grant applications were unconstitutionally rejected because they are not Black.
The lawsuits have been derided by backers of the fund as political attacks, and it’s true that one of them is being bankrolled by a group that challenges race-based policies around the country. But they also underscore a point Oregon legislative attorneys raised in July, when the Legislature’s Emergency Board created the fund with federal aid money: That the fund could be unconstitutional unless the state specifically put forth detailed evidence of past discrimination against Black families and businesses.
“We are not aware of any evidentiary findings by the legislature or the Emergency Board in support of the … grant program at issue here,” the opinion said. “Without any such findings, the program would almost certainly be unconstitutional under the Fourteenth Amendment.”
Supporters of the fund have argued there is plenty of evidence to help out Black Oregonians. Attorneys representing The Contingent, a nonprofit that is playing a lead role in administering the fund, argued in July that, without such an effort, nearly $1.4 billion in federal aid given to Oregon would largely miss Black Oregonians and businesses.
“Without targeted legislation, COVID-19 will exacerbate past disparate impacts of discrimination—which gives rise to both the imperative and legal justification for the State to take race-conscious action for Black people, Black-owned businesses, and Black community-based organizations,” a brief submitted to the Legislature by attorneys at the firm Schwabe, Williamson and Wyatt said. “These Oregonians are suffering disproportionate economic harms from COVID-19 and yet, in disproportionate numbers, are not being aided by existing and ostensibly race-neutral relief efforts.”
The brief went on to detail the state’s history of discrimination against Black people and argued the harms of that discrimination would be made worse if Black Oregonians are left behind in the effort to recover from the pandemic.
“Centuries of systemic and institutional discrimination—perpetuated and exacerbated by current systems—have caused economic disparities and exacerbated the Black community’s vulnerability,” it said. “The Oregon Cares Fund would ensure that the distribution of CARES funds does not perpetuate discrimination-related racial disparities.
Still the effort met skepticism — even from some people who cheered what lawmakers were aiming to do with the fund. And Constitutional scholars OPB contacted about the idea this summer were dubious the fund would pass muster.
Even with past harms, “Legislation that directs money to recipients on the basis of race would be very hard to defend in court,” said Brian Fitzpatrick, a Vanderbilt University law professor who has written about the Constitution’s Equal Protection Clause.
University of Oregon law professor Ofer Raban concurred that the legal bar the state needs to clear is high.
“The Supreme Court has made it clear that such explicit racial classifications are subjected to the most exacting form of constitutional scrutiny—even when their aim is benevolent rather than invidious,” Raban wrote in an email in July. “In principle, remedying past or present societal (non-governmental) discrimination cannot justify race-conscious government programs—unless the government can show that it is a ‘passive participant’ in such societal discrimination.”
As an example of being a “passive participant,” Raban offered the example of the state giving money to businesses that “actively discriminate” against Black citizens.
Despite the difficulties, at least one Oregon legal scholar believes the Oregon Cares Fund stands a chance of being upheld. Norman Williams, a constitutional law professor at Willamette University in Salem, said courts could find the fund is legal if the state can offer proof Black people and businesses are being disproportionately harmed by COVID-19, and receiving disproportionately little aid.
“The U.S. Supreme Court has set a high bar here,” Williams said. “I just don’t think that this decision… on its face fails to meet that threshold.”
The Oregon Cares Fund offers grants of up to $3,000 for families and up to $100,000 for Black-run businesses. Since its creation, the fund has allocated more than $53 million and disbursed nearly $30 million. Under the provisions of the federal CARES Act, its full $62 million needs to be earmarked by the end of the year.
That work will continue for now, after Immergut ruled against John Day-based Great Northern Resources’ request that she put an injunction on further grants.
The logging company filed suit against the state in late October, arguing that it has been financially devastated by the pandemic and that its application for a grant from the Oregon Cares Fund was certain to fail because its owners aren’t Black.
One of the logging company’s first requests: That the court blocks The Contingent from awarding any more grants, which Great Northern said would constitute “irreparable harm” to its rights. In response, the state and The Contingent offered to set aside $200,000 that the logging company would be eligible to receive if it wins its case.
Immergut ruled Friday that Great Northern “cannot show irreparable harm… Whether Plaintiff may ultimately prove an unconstitutional practice by Defendants will be addressed later in this litigation.”
The same day, Maria Garcia, owner of the Revolucion Coffee House in downtown Portland, filed a similar suit in federal court. Garcia said she has been forced to close her cafe and lay off employees because of the coronavirus pandemic. She applied for a grant through the Oregon Cares Fund, the suit said, “and would have received one but for the fact that its owner is Mexican American.”
News of Garcia’s lawsuit prompted a statement from the nonprofit Latino Network. Signed by more than 30 leaders in the Latino community, the statement called the suit “anti-black” and said Garcia’s actions “do not represent the sentiment of Latinos.”