Alaska Judge Declines to Block COVID-19 Aid to Businesses

Article

A state court judge denied a Juneau man’s request to block distribution of federal coronavirus relief aid under expanded rules proposed by Gov. Mike Dunleavy’s administration.

Superior Court Judge Philip Pallenberg ruled Eric Forrer had not shown a “clear probability of success” on the merits in his underlying case. Even if Forrer had, Pallenberg in his order wrote he would not have blocked disbursement of funds amid the virus’ economic fallout.

“The current situation is too grave, and the needs of Alaskans too great in the present emergency, for this court to stand in the way of the distribution of these federal funds to those who need them,” he said.

The order came a day after Pallenberg heard arguments on the injunction request.

The Department of Law, in a statement, said it was pleased the ruling allows the state “to move forward with helping to meet the needs of small businesses which are the cornerstone of the State’s economy.”

Joe Geldhof, an attorney for Forrer, said Pallenberg “jumped the gun” in weighing in on the merits when the case had not been fully briefed.

“We’ll just deal with it at the Supreme Court level,” he said.

The state designated $290 million of the more than $1 billion it received in federal coronavirus relief aid toward a small business program. The program was proposed by the Dunleavy administration and ratified by lawmakers and included language saying businesses that secured federal funds directly available to them under a federal relief law would not qualify. The state later sought to expand eligibility as a way to provide additional aid to businesses and allow businesses that received $5,000 or less in certain federal relief funds to become eligible for the state’s program, provided they meet other requirements.

Forrer, who argued the ratification process itself was problematic as part of his underlying case, sought to have blocked spending that did not adhere to the “express terms” lawmakers ratified.

Attorneys for the state said Forrer relied on a “literal application of language” in a program description that they said runs counter to the program’s purposes and ignores the legislative history and context of the pandemic.

Pallenberg said in the “rapidly evolving circumstances of a public health emergency,” the plan approved by lawmakers clearly was meant to be a “broad-brush description of the program, leaving the details to be fleshed out later.”

He said Forrer had not pointed to a legislative purpose that would be served by excluding businesses that received small, prior amounts of aid.

Geldhof, in court records, argued the ratification measure was at odds with constitutional provisions relating to appropriations. But Pallenberg said he could find no reason why the measure should not be deemed valid.