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Pending applicants would benefit if federal judge approves, but state must commit to more data.

Gov. Kate Brown has announced a tentative settlement in a legal challenge to Oregon's setting aside $62 million in federal funds to aid Black families, businesses and nonprofits.

capital bureauThe settlement still requires approval from a federal judge.

But it would resolve a lawsuit filed in U.S. District Court in October by Great Northern Resources, a logging company based in John Day; Dynamic Service Fire and Security, an electrical contractor in Salem, and Walter Van Leja, its owner. It named the state — through Katy Coba, director of the Department of Administrative Services and the chief operating officer of state government — as the lead defendant.

They alleged that the Oregon Cares Fund, which lawmakers on the Emergency Board approved on a split vote July 14, was based on race and violated the U.S. Constitution.

Fund advocates — the Contingent, whose 11 members oversee the fund, and the Black United Fund of Oregon — argued that the fund was justified to respond to the disproportionate effects on Blacks of the coronavirus pandemic and the resulting economic downturn.

Under the proposed settlement, pending applicants would get $5.3 million from the remaining funds once the judge approved it, and the other $3.5 million later. The rest of the fund has been spent.

"The Oregon Cares Fund has been an enormous success," Brown said in a statement on Friday, March 12. "It has provided urgent relief to Black Oregonians, Black-led nonprofits, and Black-owned businesses, which are less likely to have access to federal aid."

In return, the state would focus on more precise collection of information about racial and ethnic minorities, data from which would be the basis for future aid.

"Rather than spending taxpayer money on years of litigation in this lawsuit," Brown said, "we need to focus on increasing the state's data collection efforts so we have the information we need to invest in the communities that have faced ongoing systemic oppression and exclusion."

Nkenge Harmon Johnson, chief executive of the Urban League of Portland, was one of the fund's chief architects.

"Grants from the Oregon Cares Fund saved Oregon jobs and small businesses," she said. "In nearly every county in Oregon, the fund helped children and families who are struggling to survive the pandemic. The fund also illustrated the wisdom of addressing disproportionate impacts on the Black Oregonians through narrowly tailored remedies."

According to a statement by the fund, $49.5 million has been distributed to 15,600 Oregonians (excluding their dependents), 488 businesses and 103 nonprofit agencies.

Background on lawsuits

Judge Karen Immergut denied motions in U.S. District Court from Great Northern, and Cocina Cultura — which operates Revolución Coffee in Portland and filed suit separately — for preliminary injunctions and temporary restraining orders.

She was preparing to set up a schedule for briefs — written summaries of arguments for and against the lawsuits — that would have led to a trial in the case.

The Cocina Cultura lawsuit is not covered by the proposed settlement. About $42,000 — the amount that owner Maria Garcia demanded in the lawsuit — has been set aside to cover a potential settlement or judgment in that case. Immergut had denied a motion for a preliminary injunction last year because the application from the Oregon Cares Fund was filed about 90 days after the closure of Revolución Coffee. It has since reopened.

The original fund was approved by the Emergency Board from Oregon's share of $1.4 billion from the federal CARES Act.

Senate Republican Leader Fred Girod of Stayton, one of the dissenters on the 15-4 vote, said he was aware of Oregon's long history of discrimination against Blacks.

"Having said that, we do have a legal opinion that says this is illegal," Girod said at the July 14 meeting. "I'm sorry. I wish it was. But it's not. If we made it broader so it includes people of color, it would be legal and we wouldn't be putting the state in jeopardy."

Sen. Lew Frederick, D-Portland, said back then that Black-owned businesses did not get a fair shake for the billions of dollars that the federal government made available through the Paycheck Protection Program — either because other businesses obtained the money but did not need it, or they had pre-existing relationships with banks that gave them priority.

"It is time to do something about it — not a symbolic gesture, not a pat on the head and saying don't get upset, it'll be all right this time, we promise," he said. "There is a strong basis to show there is remedial action to address specific racial disparities in this emergency."

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