Treasury Can Send Tribal COVID-19 Funds, DC Judge Says

By Andrew Westney
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Law360 (June 11, 2020, 8:10 PM EDT) -- A D.C. federal judge on Thursday rejected the Prairie Band Potawatomi Nation's bid to stop $3.2 billion in COVID-19 relief from being paid to tribes, saying the Nation hadn't shown that funding to all tribes should be held up to let the Nation pursue claims it was shortchanged in an earlier distribution.

Treasury Secretary Steven Mnuchin had asked U.S. District Judge Amit P. Mehta on Wednesday to deny the tribe's request for an injunction to halt the allocation of $3.2 billion in tribal government funding under the coronavirus relief act known as the CARES Act. The Kansas tribe filed suit Monday alleging the department's population metric, which was used to determine an initial $4.8 billion distribution of funds under the law, caused the Nation to be underpaid by millions of dollars.

In an opinion Thursday denying the requested injunction, Judge Mehta said that he didn't have jurisdiction to hear the tribe's challenge to Treasury's plan to distribute the funds, saying the CARES Act "does not require the secretary to even consider population data, let alone population data of a particular kind."

The Nation's claim that Mnuchin didn't properly consult with tribes about the Indian Housing Block Grant metric "is also unreviewable" by the court because the CARES Act "says nothing about how the secretary should go about consulting with Indian tribes," the judge said.

In addition, the Kansas tribe's "unjustified delay forecloses emergency relief," as it was aware since May 5 that Treasury was using the IHBG data but waited until the department was about to send out the last of the funds — currently slated to begin Friday, or Monday at the latest — to seek an injunction, the judge said.

And "it would be patently unfair to make tribal governments wait any longer to receive the remaining CARES Act funds" as Mnuchin "finally … is on the cusp of distributing those funds," the judge said.

Judge Mehta declined to order Mnuchin to hold back the $7.65 million the tribe claims it was underpaid because "it is clear that the secretary's challenged distribution of a lump-sum appropriation is unreviewable."

The government distributed $4.8 billion of a total of $8 billion in direct tribal funding as part of the Coronavirus Aid, Relief and Economic Security Act in early May based on tribal population information, saying it would distribute the remaining $3.2 billion based on additional tribal employment and expenditure data that each tribe would be required to submit to the department.

The $3.2 billion has been held up long past the April 26 deadline set by the CARES Act, spurring a suit by the Agua Caliente Band of Cahuilla Indians and other tribes before the same judge to try to force Treasury to release the funds.

In its complaint Monday, the Prairie Band Potawatomi Nation said the Indian Housing Block Grant metric used by Treasury for the $4.8 billion distribution, which relies on the number of people who select "American Indian or Alaska Native" on their census form in a given geographic area, misses members who live off reservation or choose different racial classifications, and catches some who aren't tribe members.

Treasury should have instead based funding on actual tribal enrollment data, which it requested from tribes before deciding to use the already available IHBG metric instead, according to the complaint.

The Prairie Band received $2.45 million in CARES Act funds based on a population of 833, when its enrollment is actually 4,561 on and off its northeast Kansas reservation, according to the complaint.

Mnuchin said in his filing Wednesday that the tribe "simply nitpicks the methodology" used by Treasury but hasn't shown that the department's approach was an unreasonable way to approximate what the Nation was owed.

"No methodology can predict, with certainty, any given tribe's increased expenditures stemming from COVID-19, and Treasury's methodology is not 'arbitrary and capricious' simply because plaintiff believes it has a marginally superior alternative," Mnuchin said.

And in separate amicus briefs Wednesday, two groups of tribes — including the Agua Caliente Band and other plaintiff tribes involved in the separate suit seeking to force the immediate distribution of the funds — urged the court not to prevent the money from being distributed, saying tribal governments can't afford to wait any longer for the much-delayed money.

The Agua Caliente tribe and others said in their brief that they "understand and share Prairie Band's frustration with the failure" of Mnuchin to send out all the funds, but said they "cannot support any relief in this case that would cause further delays in releasing all of the Title V funds."

In a separate amicus brief, the Gila River Indian Community, the Penobscot Nation, the Nottawaseppi Huron Band of the Potawatomi and the Morongo Band of Mission Indians said that "Treasury has pursued a flawed allocation process to date that has predictably resulted in some tribal governments receiving far too much funding and others far too little."

But the tribes said that the harm the Prairie Band Potawatomi Nation "seeks to avoid is due to [its] own delay in seeking relief" and that the injunction it seeks "would harm hundreds of other tribal governments" by delaying payments.

Counsel for the parties did not immediately respond to request for comment Thursday.

The Prairie Band Potawatomi Nation is represented by Michael G. Rossetti, Carol E. Heckman, James P. Blenk and Lee M. Redeye of Lippes Mathias Wexler Friedman LLP.

The federal government is represented by Joseph H. Hunt, Eric Womack, Kuntal Cholera and Jason C. Lynch of the U.S. Department of Justice's Civil Division.

The Agua Caliente Band of Cahuilla Indians, Ak-Chin Indian Community, Arapaho Tribe of the Wind River Reservation, Cherokee Nation, Chickasaw Nation, Choctaw Nation of Oklahoma, Snoqualmie Indian Tribe, and Yurok Tribe of the Yurok Reservation are represented by Keith M. Harper, Catherine F. Munson, Mark H. Reeves and Rob Roy Smith of Kilpatrick Townsend & Stockton LLP.

The Gila River Indian Community, the Penobscot Nation and the Nottawaseppi Huron Band of the Potawatomi are represented by Donald R. Pongrace and Merrill C. Godfrey of Akin Gump Strauss Hauer & Feld LLP and the Morongo Band of Mission Indians is represented by in-house general counsel Kimberly A. Cluff.

The case is Prairie Band Potawatomi Nation v. Steven T. Mnuchin et al., case number 1:20-cv-01491, in the U.S. District Court for the District of Columbia.

--Additional reporting by Emma Whitford. Editing by Haylee Pearl.

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