By Nadia Dreid

Law360 (April 27, 2021, 11:00 PM EDT) -- The U.S. Department of Treasury won't have to dole out interim payments to tribes who are suing the agency over the amount of virus relief funds they were allocated, but it will have to set aside an additional $9.6 million to "ensure that the disputed funds are not dissipated."

U.S. District Judge Amit P. Mehta dropped the order Monday, three days after he spent an hour and a half hearing the tribes out on why they needed the relief sooner rather than later and how they were in danger of losing their money if he didn't order the funds set aside.

But because the government promised it was days away from unveiling the new methodology it planned to use to recalculate which tribes were owed what, Judge Mehta said Thursday that he was leaning toward just waiting. That sentiment was echoed in the D.C. federal judge's order.

"Although the court is sympathetic to the urgency of the matter, Treasury is making significant progress on a solution, which weighs against judicial intervention at this time," the judge said in his order.

The Shawnee Tribe of Oklahoma has already secured a court order setting aside $12 million in funds for it, double what the tribe originally said it was owed after claiming the agency miscalculated the relief it was due by using "clearly false" population data.

But it says it needs the money now and wanted Judge Mehta to sign off on an order directing the government to start making partial payments until it came up with a final methodology for calculating the new allotments.

And until Monday, the Miccosukee Tribe and Prairie Band Potawatomi Nation didn't have an injunction setting aside funds for them. The tribal nations were concerned that the money they're owed could be sent off by the Treasury Department before they could stop it.

Once the funds were disbursed to various tribes, there would be no way to get them back, they told Judge Mehta.

That argument appears to have persuaded the court, because Judge Mehta decided Monday that the Treasury Department should set aside $9.6 million, saying that the "injunctive relief is needed to maintain the status quo."

The Miccosukee Tribe and the Shawnee Tribe were both recorded by the Treasury Department as having a population of zero, something the tribes say is obviously false. The Prairie Band Potawatomi Nation says that its population was incredibly underestimated as well and brings virtually the same claims, so Judge Mehta said their situation also "warrants the same injunctive relief."

The government has argued that the Coronavirus Aid, Relief and Economic Security Act gave the Treasury secretary a wide berth to decide how to disburse the funds set aside to help tribes offset an increase in expenditures due to the pandemic.

The dispute kicked off in mid-2020, when the Shawnee Tribe told an Oklahoma federal court that it wouldn't get the funds it was due under the coronavirus relief bill because then-Treasury Secretary Steven Mnuchin decided to use Indian Housing Block Grant population data as a guide to determine allotment, but that data was bad.

The case got kicked to D.C. and landed on Judge Mehta's docket, who dismissed it a few months later after finding that the CARES Act wasn't reviewable under the Administrative Procedures Act. But after a trip up to the D.C. Circuit., an appellate panel found that the Treasury Department likely underpaid the tribes by basing its funding decisions on data that vastly underestimated their populations.

The government is in the process of developing a new methodology for calculating how to divvy up the relief funds, and it told Judge Mehta Thursday that it was about nine days away from announcing that new method to the court and the public.

Representatives for the parties did not immediately return a request for comment.

The Shawnee Tribe is represented by Pilar Thomas, Jonathan P. Labukas and Nicole L. Simmons of Quarles & Brady LLP.

The Prairie Band Potawatomi Nation is represented as an amicus by Michael G. Rossetti, Carol Heckman and James P. Blenk of Lippes Mathias Wexler Friedman LLP.

The Miccosukee Tribe of Indians of Florida is represented as an amicus by Daniel G. Jarcho, Daniel F. Diffley, George B. Abney I and Jean Richmann of Alston & Bird LLP.

The federal government is represented by Kuntal Cholera and Jason C. Lynch of the U.S. Department of Justice's Civil Division.

The case is Shawnee Tribe v. Mnuchin et al., case number 1:20-cv-01999, in the U.S. District Court for the District of Columbia.

--Additional reporting by Emma Whitford and Andrew Westney. Editing by Jay Jackson Jr.

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