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White and Latino Plaintiffs Stall Oregon COVID Relief Fund Specifically Addressing Needs of Black Families and Businesses, Calling It Discriminatory

Citing a number of historical disparities that have decimated the Black community for centuries, Oregon lawmakers last year took steps in trying to ease the burden on African-Americans impacted by the COVID-19 pandemic.

Legislators carved out $62 million in aid for Black families and business owners from the state’s $1.6 billion Coronavirus Aid, Relief and Economic Security (CARES) Act package.

But a pair of federal lawsuits filed last year in the U.S. District Court of Oregon successfully sought injunctions to stop those grant dollars from reaching their intended targets, calling the relief fund unconstitutional and biased.

“Defendants have tried to justify the fund’s exclusion of all non-Blacks from its benefits because of the alleged disparate impact of the coronavirus on Blacks and unidentified past discrimination against Blacks,” one of the legal claims argues. “(The) defendants’ justifications fail to constitute a compelling government interest sufficient to justify a race-exclusive set aside program.”

Great Northern Resources, a family-run logging company in eastern Oregon, challenged the constitutionality of the fund in an Oct. 29 lawsuit filed against the state’s Department of Administrative Services, the office that oversaw distribution of the relief funds.

A second almost identical lawsuit was filed Nov. 20 on behalf of Revolucion Coffee House, a small Mexican coffee bistro in downtown Portland owned by Marcia Garcia, a Mexican-American woman.

Both suits are filed by attorneys with strong ties to the Republican Party. And both include out-of-state attorneys from the Federalist Society, a conservative nonprofit organization that includes 70,000 practicing attorneys who claim to promote a strict interpretation of the U.S. Constitution.

The Oregon Cares Fund for Black Relief and Resiliency provided cash grants to Black residents as well as Black-owned businesses and nonprofit organizations financially impacted by COVID-19.

Oregon lawmakers enacted the $62 million grant program on July 14, voting to dedicate a portion of the state’s federal dollars to the Black community. Contingent, a Portland nonprofit that helped state officials administer the fund, was also named in the lawsuit.

Oregon legislators cited a study from the National Bureau of Economic Research (NBER) that showed the Black community was hit the hardest by COVID, with disproportionate economic and health toll from the pandemic. An overview of the Oregon Relief Fund cited another historical “pandemic” that’s impacted African Americans:

“This country’s 400 years of racial violence and strategic divestment from the Black community, deepened here in Oregon through intentional policy and practice,” it stated.

The relief fund sought to alleviate COVID’s brunt, which was exacerbating poverty in Oregon’s Black community. According to the NBER study, the number of Black-owned businesses plummeted 41 percent during the first two months of the pandemic, dropping from 1.1 million in February to 640,000 by April.

“Black people began this pandemic far behind the average Oregonian whether it is in health, education, or economic prosperity,” the fund overview stated. “We know from recent history, during the 2008 recession, that Black households lost 40% of their wealth and have not recovered in a manner commensurate to white households. Massive job loss, decreases in homeownership, asset poverty, and lack of access to capital has made the Black community less resilient to economic shocks. These factors impact the stability and wellbeing of the entire community, and left unchecked, will lead to more pronounced disparate outcomes for the impending decade.”

But that wasn’t enough to warrant a special fund exclusively for Black citizens, Great Northern’s attorney James Buchal argued in the legal complaint.

“Even accepting as true the unfortunate circumstance that members of the Black community have been disproportionately impacted by the pandemic, this is not a form of ‘discrimination’ that can be remedied by a race-based program,” Buchal asserted.

Both plaintiffs called the Oregon Cares Fund discriminatory because it specifically targeted the Black community. Black families in hardship were eligible for up to $3,000 in grant dollars. Businesses with majority Black ownership and at least a 33 percent Black workforce qualified for up to $100,000.

Buchal, chairman of the Multnomah County Republican Party, vied to become Oregon’s attorney general in 2012. He won the GOP nomination but lost in the general election. He’s served as attorney for Patriot Prayer, a far-right activist group based in a Portland suburb. In September, he filed a federal lawsuit against the Multnomah County district attorney, alleging unfair prosecution for trying two of the group’s leaders on charges of inciting riots in 2019.

The Portland attorney also accused state officials of unfair treatment by instituting the Oregon Cares Fund.

“This express use of race in distributing government money is unprecedented and blatantly unconstitutional,” Buchal declared in the filing against the Oregon Department of Administrative Services.

Great Northern’s complaint states the company was preparing its first batch of timber deliveries in March when purchases from a local sawmill, one its primary customers, dried up due to uncertainties in the global market.

It was several months before the company’s sales rebounded. Great Northern claimed it lost $100,000 in sales from the pandemic and projected a $200,000 overall loss for the year.

The lawsuit claimed Great Northern was denied financial assistance from several government-relief programs, including the federal Small Business Administration disaster loan program, before vying for the Oregon Cares grant in October. Contingent informed company officials that Great Northern wasn’t eligible for the grant because its owner isn’t Black.

The company’s lawsuit alleges that violated racial anti-discrimination protections in the U.S. Constitution. It’s part of a class-action case involving two white-owned companies.

The other was Dynamic Service Fire and Security, an electrical services company whose owner claimed it was on the brink of layoffs if he didn’t get relief.

“It’s discriminatory,” Walter Leja told The New York Times. “It’s locking up a bunch of funds that can only be used by Black businesses when there’s a ton of other businesses out there that need access to those funds. It’s not a white or Black thing. It’s an everybody thing.”

Shawn Lindsay, a Portland attorney who served two years as a GOP member of the Oregon House of Representatives, is representing Revolucion Coffee House. That lawsuit listed the Black United Fund of Oregon as a defendant. The nonprofit organization helped Contingent manage distribution of the grant dollars.

Lindsay indicated the restaurant’s profits dropped dramatically at the onset of the pandemic, forcing Garcia to close shop for three months in March. She re-opened Cocina Cultura for a short time in the summer, but it shut down indefinitely in August. Garcia had to lay off numerous employees, the lawsuit claimed.

“Even if defendants had an adequate justification for providing some preferences for Blacks in the distribution of moneys related to the fund, a race-exclusive set aside program is not narrowly tailored to meet that compelling interest,” he claimed. “The fund fails to consider possible effects of the coronavirus, or past discrimination, on other groups, including Latinos.”

The complaint did not specify if Garcia sought or received any other CARES Act funding. Her business applied for the Oregon Cares Fund in August and had yet to receive a response by the time she filed her suit.

“Plaintiff is qualified to receive a grant from the fund and would have received one but for the fact that its owner is Mexican American,” the complaint stated.

Contingent representatives could not immediately be reached Wednesday and Black United Fund officials did not respond to a request for comment.

A spokesperson for the Oregon Cares Fund said Wednesday $50 million had been awarded and another $8 million in assets is frozen in court, pending the outcome of the two lawsuits — a legal process that could take years to resolve. About $4 million will be paid out as administrative fees to the nonprofits that helped administer distributing the grants. Anything left over will be awarded as grant funding.

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