Alaska Native Cos. Can Get Part Of $8B COVID Fund

By Andrew Westney
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Law360 (June 29, 2020, 4:07 PM EDT) -- A D.C. federal judge has ruled that Alaska Native corporations should share in $8 billion of COVID-19 relief for tribal governments, lifting an injunction he'd put in place when he thought federally recognized tribes were likely to win their bid to block funding to the corporations.

U.S. District Judge Amit P. Mehta decided Friday that the for-profit ANCs qualify as "Indian tribes" eligible for funding under the Coronavirus Aid, Relief and Economic Security, or CARES, Act, saying he'd changed his mind after granting an April injunction to the Confederated Tribes of the Chehalis Reservation and others that argued Congress wanted only federally recognized tribes to receive the funds.

The CARES Act relies on definitions borrowed from the Indian Self-Determination and Education Assistance Act, a federal law governing tribal contracting, and "by incorporating wholesale ISDEAA's definition of 'Indian tribes' into the CARES Act, Congress declared ANCs to be eligible for [the CARES Act's] Title V emergency relief funds," according to Judge Mehta's opinion.

"While the court agreed with plaintiffs' argument at the preliminary injunction stage" that the ANCs don't have "recognized governing bodies" under the CARES Act, "upon further reflection the court now concludes the opposite —'recognized' standing alone, as it is used in the CARES Act's definition of 'tribal government,' does not convey federal recognition of an Indian tribe," the judge said.

In a motion Monday, the Confederated Tribes and others asked the court for an injunction preventing Treasury from distributing the funds to ANCs while the tribes appeal the decision to the D.C. Circuit, saying that without an injunction "they will forever be denied the opportunity to share in hundreds of millions of dollars that Congress set aside for federally recognized Indian tribes to support their governments' ongoing efforts to protect and serve their citizens during the COVID-19 pandemic."

Six tribes filed the original complaint in the case on April 17, saying the 12 Alaska Native regional corporations and 225 Alaska Native village corporations — which have billions of dollars in revenue and are among the largest private landowners in Alaska — were not intended to receive any of the "tribal stabilization fund" included in the $2 trillion CARES Act.

The Confederated Tribes of the Chehalis Reservation, the Navajo Nation, three Alaska tribes and other federally recognized tribes asked for summary judgment on May 29, saying Judge Mehta "hewed to the plain language of the statute and accepted principles of statutory construction" when he issued his April 27 injunction preventing the Treasury Department from sending the ANCs any of the funds.

Two more cases were consolidated with the lead suit, including one by the Cheyenne River Sioux Tribe, Rosebud Sioux Tribe, Oglala Sioux Tribe and others, and another by the Ute Indian Tribe of the Uintah and Ouray Reservation.

U.S. Treasury Secretary Steven Mnuchin, whose department is in charge of distributing the money, said in his own motion for summary judgment in April that ANCs are meant to help provide Alaska Natives with health care and other services, making it "eminently sensible that they would be eligible for contracting under ISDEAA and for funding under Title V of the CARES Act," Mnuchin said.

The Treasury Department paid out $4.8 billion of the CARES Act funds to tribes based on population information starting May 5, and almost all of the remaining funds in June based on employment and expenditure data. The department has said it withheld $162 million from the initial distribution in case the court decided in its favor, with more funds expected to be withheld from the second distribution.

In the tribes' injunction motion Monday, they said that Mnuchin "has refused multiple requests" from the tribes to say how much ANCs will receive in the second distribution, "but news reports indicate that ANCs can expect to receive approximately $533 million."

Judge Mehta admitted during June 12 oral arguments that he was struggling to wrap his head around what constitutes a tribal government, and in Friday's decision said the case "does not present easy, straightforward questions of statutory interpretation" and he "has wrestled with them."

The judge said that whether ANCs qualify as "Indian tribes" for the CARES Act hinges on an "eligibility clause" taken from the ISDEAA that limits the definition by targeting only tribes "recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians."

"Although a close question, the court is now convinced that, in 2020 when Congress passed the CARES Act, it could not have intended the eligibility clause to apply [to] ANCs," the judge said, noting that Mnuchin and some of the plaintiff tribes agreed that ANCs couldn't satisfy that clause.

"Certainly by 2020, Congress understood that no ANC could satisfy the eligibility clause, as none had done so since ISDEAA's inception," the judge said. "Thus, by incorporating the ISDEAA definition into the CARES Act, Congress must have known that it had selected a definition of 'Indian tribe' that expressly encompasses ANCs, notwithstanding their falling outside the definition's eligibility clause. Congress therefore intended to make Title V funds available to ANCs."

In the ISDEAA, "Congress went out of its way" to include ANCs in the definition of "Indian tribe," which is "compelling evidence that Congress intended ANCs to meet that definition," the judge said.

"It would be an odd result indeed for Congress to include ANCs in one breath only to negate their inclusion in the very next breath through the eligibility clause," the judge went on.

In addition, the U.S. Department of the Interior and its Bureau of Indian Affairs have long regarded ANCs as "Indian tribes" under the ISDEAA, and their "status as a contracting partner of 'last resort' only underscores that ANCs are nevertheless eligible for ISDEAA contracts," the judge said.

Whether the ANCs should receive funding "in proportion to their status as a service provider of 'last resort' … rests squarely within the broad discretion that Congress vested in the secretary," the judge said in a footnote.

The ANCs must have a "recognized governing body" to qualify for contracting under the ISDEAA, so must also have one for purposes of the CARES Act, the opinion said.

The judge rebuffed the plaintiff tribes' claim that the decision would have a major impact on the law impacting tribes, saying his decision "simply recognizes that ANCs are eligible for CARES Act funds, as Congress intended — no more, no less."

The Confederated Tribes and others said in their motion Monday that the court's interpretation of the eligibility clause was "highly vulnerable on appeal."

"The court cannot ignore the clear grammatical construct of the ISDEAA definition, which applies the eligibility clause to every entity and group listed in the statute," including ANCs, the tribe said.

The tribes also said that Judge Mehta didn't focus enough on the key term "tribal government" in the CARES Act, as ANCs "are not governments," "are not acting as governments in the face of this pandemic" and "do not act as Indian tribal 'governments' under [the] ISDEAA."

On Monday afternoon, Judge Mehta ordered Mnuchin to give the court "at least one business day's notice before he disburses any CARES Act funds" to the ANCs and said the parties should meet and propose a briefing schedule by Wednesday if the federal government or the ANC intervenors plan to oppose the injunction request.

The National Congress of American Indians said in a statement Friday that it was "extremely disappointed" in the ruling, which it said "would result in critical congressional funding intended for Indian tribal governments being diverted to state chartered corporate entities with no governance authority and no governmental duties to tribal citizens in Alaska."

The Alaska Federation of Natives, whose membership includes the majority of both the federally recognized tribes in Alaska and the ANCs, praised the ruling in a statement Friday.

"Alaska has a unique history of tribal self-governance and Native self-determination," AFN President Julie Kitka said in the statement. "Our people have never understood these concepts to be mutually exclusive. Alaska Natives are pleased Judge Mehta reached the same conclusion, particularly during the Covid-19 global health pandemic."

The ANCSA Regional Association and Alaska Native Village Corporation Association also celebrated the decision in a statement Friday, saying the funds "will provide immediate support to Alaska's rural communities suffering from COVID-19 and help repair the economic damage caused by the pandemic."

Sens. Lisa Murkowski and Dan Sullivan, R-Alaska, and Rep. Don Young, R-Alaska, said in a statement Friday that the CARES Act included the ISDEAA language to make sure that Alaska Natives could fight the coronavirus pandemic.

"We appreciate that the district court judge now read the law as we wrote it, so that Alaska Native communities across the state have the option to use all vehicles available," the lawmaker said.

Representatives for the Treasury Department did not immediately respond to a request for comment Monday.

The tribes in the lead case are represented by Riyaz Kanji and Cory J. Albright of Kanji & Katzen PLLC, Harold Chesnin of the Confederated Tribes of the Chehalis Reservation, and Lisa Koop Gunn of the Tulalip Tribes.

The Cheyenne River Sioux Tribe is represented by Nicole E. Ducheneaux and Rose M. Weckenmann of Big Fire Law & Policy Group LLP. The Rosebud Sioux Tribe is represented by Natalie A. Landreth, Wesley James Furlong, Erin C. Dougherty Lynch, Matthew N. Newman and Megan R. Condon of the Native American Rights Fund. The Oglala Sioux Tribe is represented by Jennifer Bear Eagle of the Oglala Sioux Tribe Legal Department.

The Ute Indian Tribe of the Uintah and Ouray Reservation is represented by Frances C. Bassett, Jeffrey S. Rasmussen, Jeremy J. Patterson and Rollie Wilson of Native Law Group.

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

Ahtna Inc. is represented by Michael J. O'Leary and Jonathan Katchen of Holland & Hart LLP. Calista Corp. et al. are represented by Ragan Naresh, Paul D. Clement, Erin E. Murphy and Matthew D. Rowen of Kirkland & Ellis LLP. The ANC associations are represented by Daniel W. Wolff, David Chung and Kirsten L. Nathanson of Crowell & Moring LLP, and Christine V. Williams and J. Harrison Powell II of Outlook Law LLC.

The lead case is Confederated Tribes of the Chehalis Reservation v. Mnuchin, case number 1:20-cv-01002, in the U.S. District Court for the District of Columbia.

--Additional reporting by Emma Whitford and Kelly Zegers. Editing by Gemma Horowitz.

For a reprint of this article, please contact reprints@law360.com.

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