By Andrew Westney

Law360 (May 18, 2020, 7:18 PM EDT) -- Treasury Secretary Steven Mnuchin has told a D.C. federal judge that his department plans to send out the $3.2 billion it still owes tribal governments under the CARES Act by June 5, nearly six weeks after the law's deadline to distribute the money.

The department had been ordered by U.S. District Judge Amit P. Mehta on May 11 to let him know what the Treasury Department's timetable would be to deliver the remaining $3.2 billion it owes tribes to fight the COVID-19 pandemic, as the judge denied a bid by the Agua Caliente Band of Cahuilla Indians and other tribes to force the department to distribute the money immediately.

Although Judge Mehta had said that taking until May 26 — which is double the time allowed by the Coronavirus Aid, Relief, and Economic Security Act to send the money — might make his decision whether to force the government's hand "a closer one," Mnuchin said in a status report Friday that the department expects to take several days to receive data from tribes and several days more to process it before it starts distributing money by June 5.

Mnuchin counselor Daniel Kowalski said in a declaration accompanying the report that Treasury "continues to work diligently toward disbursing the remaining $3.2 billion," after the department made an initial distribution of $4.8 billion starting May 5.

While the first distribution was based on tribal population information, the $3.2 billion allocation is based on additional tribal employment and expenditure data that each tribe will need to submit to the department.

Kowalski said in his declaration that the department had requested the data on its website last Thursday, and that it expects the portal for tribes to submit the information to open early this week.

Tribes will then have seven business days to respond, until just before midnight Alaska time on May 26.

In deciding on that window, "Treasury balanced the potential burden of a relatively compressed time frame to respond against tribes' immediate need for these funds during this public health emergency," Kowalski said.

The department then expects to review all the submissions from tribes and determine how much each will receive within another seven business days — by June 4 — and will start payments "no later than the next business day."

Kilpatrick Townsend & Stockton LLP, which represents the tribes, said in a statement Monday that it was "pleased that Treasury has received the message from Judge Mehta that he will not tolerate further delay."

"We hope Treasury will live up to its commitments this time," the firm said.

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

The Agua Caliente Band, the Ak-Chin Indian Community in Arizona and six other tribes filed an amended complaint May 3, saying they would suffer irreparable harm, including the need to cut off essential services and lay off staff, unless Mnuchin immediately disbursed the $8 billion in direct tribal coronavirus relief funding in the $2.2 trillion CARES Act, which President Donald Trump signed March 27.

The Treasury Department announced its plan May 5 to distribute the money, saying that the first, $4.8 billion distribution would be based on tribal population information used for the Indian Housing Block Grant.

That money began going out May 5 and was mostly distributed by May 8, with only about about $162 million being withheld for Alaska Native corporations if the court ultimately agrees with the department that they are entitled to a share, Jason C. Lynch of the U.S. Department of Justice said during a May 8 hearing.

The government said at the time that the remaining $3.2 billion would be distributed based instead on the number of employees of each tribe and their businesses, as well as each tribe's expenditures in dealing with the coronavirus outbreak.

In his May 11 ruling denying the tribe's request for an injunction or mandamus relief, Judge Mehta found the plaintiff  tribes hadn't shown the Treasury's failure to deliver the full $8 billion it owes tribes under the CARES Act had gone so far past the law's April 26 deadline that he should compel the department to send the money.

But the judge said a further delay of two months "will not be acceptable" and one month past the lapsed deadline might be pushing it.

In guidance posted last week on the Treasury Department website to assist tribes submitting data for the $3.2 distribution, the department asked for each tribe to provide the number of employees the tribal government and any majority tribe-owned entities had for each quarter of 2019.

The department also asked for each tribe's "total governmental expenditures" for 2019 for health, public safety, education, housing, economic development and many other programs — excluding "capital outlays and debt service costs" — as well as the total federal assistance the tribe received for the year.

The tribes are represented by Keith M. Harper, Catherine F. Munson and Mark H. Reeves of Kilpatrick Townsend & Stockton LLP.

The Treasury Department is represented by Assistant Attorney General Joseph M. Hunt, Assistant Branch Director Eric Womack and Jason C. Lynch of the U.S. Department of Justice's Civil Division.

The case is Agua Caliente Band of Cahuilla Indians et al. v. Mnuchin, case number 1:20-cv-01136, in the U.S. District Court for the District of Columbia.

--Additional reporting by Kelly Zegers and Emma Whitford. Editing by Bruce Goldman.

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