JOHN DAY — A John Day-based lawsuit has halted further distributions of COVID-19 funds earmarked by the governor for Black-owned businesses and families.

The state’s $62 million relief fund for Black Oregonians will no longer issue grants, as it deposited the remaining $8.8 million with a federal court Dec. 17, 2020, as legal challenges to its constitutionality continue.

John Day logging company Great Northern Resources, which lists Tad Houpt and Grant County Commissioner Sam Palmer as agents, filed a lawsuit alleging race-based discrimination when its grant application was denied. The lawsuit is ongoing.

Great Northern and a Portland-based, Latino-owned coffee company and restaurant had asked U.S. Judge Karin Immergut to issue a preliminary injunction or restraining order to stop the fund distributing money based on race, according to a complaint filed in U.S. District Court Dec. 11.

Immergut denied those requests in November, according to an amended class-action lawsuit filed with the U.S. District Court Dec. 6. In those instances, the Oregon Cares Fund set aside $200,000 for Great Northern if they prevailed in their legal challenges, according to a legal brief filed Nov. 10. This led Immergut to find that they couldn’t show the irreparable harm needed to warrant an injunction in a Nov. 20 legal opinion.

This time around, Great Northern Resources — the original plaintiffs in the case — joined with Salem electrical contractor Dynamic Service Fire and Security and sought class-action status for the suit, according to a complaint filed Dec. 6.

According to the amended class-action lawsuit, the plaintiffs applied for grants from other federal and state sources but were unsuccessful.

Great Northern applied for a grant through two Oregon-based community organizations designated by the state to review and administer funds earmarked for Black-owned businesses and families, the Contingent and the Black United Fund of Oregon, in early October.

According to the Dec. 6 complaint, the online application asked what percentage of owners of this business identify as Black. Great Northern answered zero. The complaint goes on to say that Great Northern sued the state on Oct. 29 to “stop them from enforcing their racial exclusionary policy.” The complaint states the Contingent denied Great Northern’s application on Nov. 9.

The logging company intends to reapply for a relief grant when “the courts enjoin the enforcement of the racial exclusion that renders Great Northern ineligible for relief for the Fund.”

Salem-based Dynamic Service Fire and Security saw their business go from grossing roughly $40,000 a month to nearly $10,000 to $18,000, according to the Dec. 6 complaint.

The business tried to apply for relief from the state’s small business grant program in November, but by the time they logged on to the website they could not submit an application as the funds were exhausted, the Dec. 6 complaint stated.

The complaint states: “Dynamic Service wishes apply for relief from the fund, but is disqualified from obtaining relief on account of its race.” The complaint goes on to state that the owner Walter Leja is disqualified individually from applying for relief due to his race as well.

According to court documents, the Oregon Cares Fund offered to deposit its remaining $8.8 million with the court, which, for the time being, has halted the program while the lawsuit continues.

Palmer said in a phone call Thursday that, while he owns equipment and property with Great Northern, he has not been involved in the lawsuit.

Houpt declined the Blue Mountain Eagle’s request for comment.