A unique state fund that steered coronavirus relief money directly to Black Oregonians and Black-owned businesses is now on hold, as legal challenges grow.
On Thursday, administrators of the $62 million Oregon Cares Fund agreed to put $8.8 million that had yet to be awarded to applicants into a special account with the U.S. District Court of Oregon. The money will remain there while a class-action lawsuit that claims the account unconstitutionally favors members of a single race plays out.
“Pending clarity from the court on the matter of the class, we have decided to temporarily move the remaining $8.8 million in the Fund to the court,” backers of the fund said in a statement. “We will make the case that supporting Black Oregonians does not automatically mean that everyone else is harmed. That idea is only perpetuating the problem of race in America today.”
The move halts a grant program that drew legal questions even before lawmakers approved the Oregon Cares Fund in July. The program was meant to address racial disparities that have played out both in the impacts of the COVID-19 pandemic and how relief money for businesses and individuals has flowed out through other channels.
But the proposal raised concerns that it violated the equal protection clause of the 14th Amendment by solely benefitting Black people. Courts have generally set a high bar for such actions, even if they’re meant to address past discrimination.
Legal scholars and the Legislature’s own attorneys have expressed skepticism the fund would pass constitutional muster. Its supporters have said it’s a needed bulwark to ensure Black Oregonians are not left out of pandemic recovery.
The latest twist, first reported by The Oregonian/OregonLive, came after an Eastern Oregon logging company, Great Northern Resources, refiled an earlier legal challenge to the fund. The new filing includes new plaintiffs, and seeks to create a class-action lawsuit roping in people who were ineligible from receiving grant money because of their race.
That approach left The Contingent and the Black United Fund — two nonprofits administering the money — with a tough choice. The groups had already deposited nearly $250,000 with the federal court, in case they lost legal challenges brought by two non-Black owned businesses. With the class action suit, they feared they could be on the hook for far more.
“They face untold exposure in this class action litigation—exposure that, if realized, would cause them to collapse, leaving their constituents without valuable and much-needed support in their communities,” attorneys for the two nonprofits wrote in a legal filing.
“On the other hand, if the Nonprofits fail to grant the money pursuant to the terms of the Grant Agreement, they will breach their contract with the State. They will also fail in their mission to disseminate these funds to the people and businesses in Oregon who are in need.”
So the groups proposed depositing the remaining $8.8 million with the court, to do with as it sees fit once the lawsuit is resolved. U.S. District Judge Karen Immergut agreed, despite objections from the plaintiffs. The two parties have been directed to enter into mediation.
To date, the Oregon Cares Fund had awarded nearly $50 million to businesses and individuals. It has applications on hand for more than $9 million more. Roughly $3 million has been earmarked for administrative costs.