Alaska judge denies motion that would have paused some coronavirus small business grants

Published: Jul. 11, 2020 at 4:55 PM AKDT
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A Juneau Superior Court judge has denied a preliminary injunction motion that would have paused some small business grants from being released during the COVID-19 pandemic.

The preliminary injunction centered on whether the Dunleavy administration used a legally valid process to change which small businesses are eligible for coronavirus grants.

House Bill 313 originally made small businesses that had taken any federal loans ineligible for state grants. The Department of Law later advised that businesses that had taken small federal loans could still receive state help.

Eric Forrer, a Juneau resident, challenged that process, saying the administration was using ”revisionist theories” to change the grant program that ran counter to how it was designed to operate.

In his order denying Forrer’s motion, Judge Philip Pallenburg said that HB 313 intended to give the administration some latitude to decide how the grant program is implemented.

The broader question of whether the Legislature acted constitutionally when it used a novel process to spend $1.5 billion in CARES Act funds has also largely been answered. “This case is done like a turkey three days after Thanksgiving,” said Joe Geldhof, a Juneau attorney appearing on behalf of Forrer.

Geldhof does not plan to appeal how the $290 million small business grant program is implemented. The broader question on the appropriation process used by the Legislature is a different matter.

Geldhof said that Pallenburg had effectively decided that it was valid for the Legislature to ratify the governor’s coronavirus funding request rather than go through a typical appropriation process. He now plans to file an appeal with the Alaska Supreme Court challenging that interpretation when the trial case is formally decided.

The intention is not to block CARES Act funds being released but to clarify how the appropriation process of public funds is made validly. “I think that’s worthy of bringing to the Supreme Court and saying, ‘Let’s get an opinion on this,’” Geldhof said.

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