By Andrew Westney

Law360 (September 11, 2020, 10:18 PM EDT) -- The D.C. Circuit weighed competing approaches to reading key language in the CARES Act on Friday, as the judges tried to pin down whether Alaska Native corporations should share in $8 billion in tribal government funding to fight the COVID-19 pandemic, or if only federally recognized tribes should get the money.

During a teleconference hearing Friday before a three-judge panel, Riyaz Kanji of Kanji & Katzen PLLC, who represents the Confederated Tribes of the Chehalis Reservation and other federally recognized tribes, said that a D.C. federal judge got it wrong when he ruled that the ANCs were meant to be included in CARES Act funding and were not excluded by an "eligibility clause" borrowed from a 1975 contracting law.

U.S. District Judge Amit P. Mehta decided in June that the "eligibility clause" taken from the Indian Self-Determination and Education Assistance Act — which targets tribes "recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians" — was not intended to apply to the ANCs, and that they otherwise met the CARES Act's requirements to qualify for funding.

Kanji told the D.C. Circuit panel on Friday that while ANCs are listed among groups that meet the CARES Act's definition of "Indian tribe," a "natural reading" of the law means that they don't meet the subsequent eligibility clause that limits that definition, and therefore don't qualify for funding.

Whether the eligibility clause should apply to ANCs was an open question when the ISDEAA was enacted in 1975, particularly since the ANCs had only recently been created through the 1971 Alaska Native Claims Settlement Act, Kanji said.

"Congress didn't have reason to think that ANCs could never satisfy the clause in 1975," and it would have been "passing strange" if the ANCs were the only type of entity listed in the ISDEAA that wasn't subject to the eligibility clause, Kanji said.

But Adam C. Jed of the U.S. Department of Justice, representing Treasury Secretary Steven Mnuchin, whose department is in charge of distributing the relief funds, told the panel that "statutes are not self-defeating" and that the CARES Act "should not be read to include ANCs and then immediately take them away."

Circuit Judge Patricia A. Millett took the lead in asking attorneys for the parties for evidence to show what Congress was thinking when it created the eligibility clause in 1975, telling Jed that the ANCs' status was "rather a mess" at the time.

The DOJ attorney responded that it would be "hard to understand how these corporations could be eligible" for services provided to Indians, since "a corporation isn't a group of people, but an artificial legal entity."

Circuit Judge Gregory G. Katsas asked Paul D. Clement of Kirkland & Ellis LLP, representing the ANCs that intervened in the case alongside Mnuchin, "Isn't the most fair way of thinking about this case that there are competing canons of interpretation?"

The ANCs' contention that including the companies and then eliminating them with the next clause is "a very powerful one that we don't likely presume substantial inexplicable surplusage," Katsas said. But the tribes also "have a pretty powerful one that we don't like … completely bizarre grammatical constructions" that would have the eligibility clause apply to all entities in the CARES Act's list of "Indian tribes" except for the ANCs.

"Which of those prevails, and why?" Judge Katsas asked Clement.

Clement said that there are two ways to read the eligibility clause, and either one leads to a win for the ANCs.

If the term "recognized" in the eligibility clause is given "its ordinary meaning" — instead of indicating federal recognition of a sovereign tribe like the plaintiffs — that "completely avoids the grammatical problem," as ANCs would satisfy the eligibility clause under that reading, Clement said.

But if "recognized" is understood to indicate a sovereign entity, then the term could only modify types of "Indian tribes" that "it can usually or meaningfully modify" — which plainly doesn't include the ANCs and didn't in 1975, he said.

Judge Katsas asked Clement why the tribes' interpretation didn't provide a way to resolve the textual questions by saying that "recognized" implies sovereignty, and whether ANCs could be considered sovereign was not a settled issue at the time.

Clement answered that given that the ANCs are state-chartered corporations and there were Alaska Native villages recognized as sovereign, "it beggars belief" that Congress would have thought the ANCs were sovereign in 1975.

Jeffrey S. Rasmussen of Patterson Earnhart Real Bird & Wilson LLP, who represents the Ute Indian Tribe of the Uintah and Ouray Reservation and other tribes in the case, emphasized that the CARES Act is the focus of the case, and that the law was intended by Congress to support sovereign tribal governments.

The particular section of the law that provides the $8 billion "tribal stabilization fund," Title V, was "all for sovereigns," including the 574 federally recognized tribes as well as state and local governments, Rasmussen said.

Payments to the ANCs are currently on hold during the tribes' expedited appeal in the D.C. Circuit.

Circuit Judges Karen LeCraft Henderson, Patricia A. Millett and Gregory G. Katsas sat on the panel for the D.C. Circuit.

The Confederated Tribes of the Chehalis Reservation and other tribes were represented at oral arguments by Riyaz Kanji of Kanji & Katzen PLLC.

The Ute Indian Tribe of the Uintah and Ouray Reservation and other tribes was represented at oral arguments by Jeffrey S. Rasmussen of Patterson Earnhart Real Bird & Wilson LLP.

The federal government was represented at oral arguments by Adam C. Jed of the U.S. Department of Justice's Civil Division.

The intervening ANCs were represented at oral arguments by Paul D. Clement of Kirkland & Ellis LLP.

The cases are the Confederated Tribes of the Chehalis Reservation et al. v. Steven Mnuchin et al., case number 20-5204, Cheyenne River Sioux Tribe et al. v. Mnuchin et al., case number 20-5205, and Ute Tribe of the Uintah and Ouray Reservation v. Mnuchin et al., case number 20-5209, in the U.S. Court of Appeals for the District of Columbia Circuit.

--Additional reporting by Adrian Cruz. Editing by Peter Rozovsky.

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