Alaska judge to hear arguments in virus relief aid case

JUNEAU, Alaska (AP) — A state court judge is set to hear arguments Thursday over whether to block disbursement of federal coronavirus relief aid to small businesses under a reinterpretation of program rules by Alaska Gov. Mike Dunleavy's administration.

The request is part of a lawsuit brought by Juneau resident Eric Forrer.

The state designated $290 million of the more than $1 billion in federal coronavirus relief aid toward a small business program. The program, proposed by the Dunleavy administration and ratified by lawmakers, said businesses that secured federal funds directly available to them under a federal relief law would not qualify.

Forrer, who argues the ratification process itself was problematic, is seeking a court order that either would halt distributing funds set aside for businesses until lawmakers approve a “valid expenditure” or block spending that does not adhere to the “express terms” lawmakers ratified.

He argues the administration is promoting “revisionist theories” about how the money can be allocated that conflict with the language used in setting up the program.

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

“The evolving emergency and the developing federal response are vital aspects of the context in which the program was created,” Assistant Attorneys General Margaret Paton Walsh and Bill Milks say in court records. They also say Forrer lacks standing in the case.

The state Department of Commerce, Community and Economic Development last month announced eligibility changes intended to help more businesses. The changes include allowing businesses that received $5,000 or less in certain federal relief funds to become eligible for the state’s grant program, provided they meet other requirements.

The state has not yet implemented the changes, Glenn Hoskinson, a special assistant to Alaska’s commerce commissioner, said, citing the litigation.

“It is the State’s position that the changes are permissible and lawful adjustments to the administration of the small business relief program, and we hope to be able to move forward very soon,” she said by email.

As of Tuesday, 223 applications totaling $9 million had been approved, most of which had been funded, she said.

The program has gotten off to a slower start than expected. In a report to the Legislature, the department cited incomplete applications and a high volume of unnecessary documentation submitted as part of applications as a primary reason for the low number of approvals.