By Emma Whitford

Law360 (July 28, 2020, 7:15 PM EDT) -- Tribal governments would receive no new direct funding under Senate Republicans' latest coronavirus relief proposal, which increases flexibility for spending existing relief funds and includes $2.6 billion for tribal education and health care.

The roughly $1 trillion proposal revealed on Monday, which Senate Majority Leader Mitch McConnell, R-Ky., described as "carefully tailored," also lacks direct funding for state and local governments. The Health, Economic Assistance, Liability Protection and Schools Act, or HEALS Act, contrasts sharply with Democrats' $3 trillion Heroes Act proposal, which passed the House in May and would send $24 billion to tribes and tribal groups. 

Tribes had sought $20 billion in direct funding in the March coronavirus relief package, which ultimately sent $10 billion to tribes, including an $8 billion "stabilization fund" for tribal governments.

Since the passage of that relief legislation, tribes including the Navajo Nation have said they need more time, beyond a Dec. 30 deadline, to spend their relief funds. A bipartisan bill introduced this month by Rep. Tom O'Halleran, D-Ariz., and Rep. Paul Cook, R-Calif., would extend that deadline through the end of 2022.

Monday's Senate proposal would also push the deadline, according to a Finance Committee summary. Tribes would have until 90 days after the last day of their 2021 fiscal year to spend the March relief package funds — Dec. 30, 2021, for tribes that follow the federal fiscal calendar. 

"It looks like the pandemic is going to outlast December 30, so not having to obligate and spend those funds by the end of the year is very encouraging," said James T. Meggesto, head of Holland & Knight LLP's Native American law team and member of the Onondaga Tribe.

Another provision would allow tribes to spend up to a quarter of their relief funds to offset revenue shortfalls — not an option under the current relief legislation. 

Brian Gunn, principal at Powers Pyles Sutter & Verville PC and member of the Confederated Tribes of the Colville Reservation, told Law360 on Monday that the new flexibility could give tribes "reason to be hopeful." 

"Like the Senate bill that ultimately ended up becoming the [Coronavirus Aid, Relief and Economic Security Act] a few months ago, this HEALS Act is a starting point for discussion and negotiation," Gunn said. "Most people believe that if there is a final bill, it will be some middle point [with the Heroes Act]. Hopefully for the tribal and Indian constituencies, that will mean some additional resources across the board." 

The HEALS Act would also increase reimbursement for unemployment benefit costs incurred by tribes — 75%, up from 50% under the CARES Act. 

"We'd still like that to be 100%, but the fact that that's in this original draft is a good thing. It's negotiable," Gunn said. 

Also on Monday, Senate Republicans introduced the Continuing Small Business Recovery and Paycheck Protection Program Act, with provisions that would allow certain tribal small businesses to apply for a second loan.

Tribal casinos and health centers have reported receiving funding through the Paycheck Protection Program already this year.

According to a summary of the bill, in order to qualify for a second loan, businesses must have 300 or fewer employees and demonstrate at least a 50% reduction in gross receipts in the first or second quarter of 2020, over 2019.

Loans can total 2.5 times the average monthly payroll in the year before the loan, up to $2 million.

The HEALS Act includes an additional $306 billion in emergency appropriations for various areas, from transportation to defense, labor and agriculture.

Under the proposal, $605 million would go to the Indian Health Service and tribal and urban health programs. An additional $1 billion would go toward tribal health care, specifically for sanitation, "isolation or quarantine space," and medical equipment, according to a summary of the proposed expenditures.

The U.S. Department of the Interior and the Indian Health Service would have to provide spending plans and reports pertaining to CARES Act and other relief funds, according to the proposal.

The proposal sets aside $1 billion for the Bureau of Indian Education, out of a total $105.1 billion for the U.S. Department of Education.

McConnell has emphasized that coronavirus-related liability protections are a priority in any future relief package. The new Safe to Work Act would put virus-related liability claims in federal courts and protect parties except in cases of "gross negligence or willful misconduct."

This could prove redundant for tribes, Meggesto predicted. "At least in the broadest sense, tribes have [sovereign] immunity, but to the extent that tribes have waived it, that could be useful," he said. 

Some conservatives have already balked at the cost of the HEALS Act, with Democratic leadership rejecting it as too little, too late.

On the Senate floor on Monday, Minority Leader Chuck Schumer, D-N.Y., dismissed the plan as "totally inadequate."

--Additional reporting by Andrew Westney and Andrew Kragie. Editing by Nicole Bleier.

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