By Andrew Westney

Law360 (May 5, 2020, 10:33 PM EDT ) The Treasury Department said Tuesday that it would start paying out $4.8 billion of a total $8 billion in funding for tribes fighting the COVID-19 pandemic, but said it will reserve a portion of that money it believes should go to Alaska Native Corporations.

U.S. Treasury Secretary Steven Mnuchin in a joint statement with Interior Secretary David Bernhardt said that the federal government would start Tuesday to deliver 60 percent of the $8 billion in direct tribal funding under the $2 trillion Coronavirus Aid, Relief and Economic Security Act, a process it expects to take "several banking days" to complete.

That distribution will be based on tribal population information used for the Indian Housing Block Grant, with a minimum of $100,000 for each tribe, according to the statement.

However, the Treasury Department said it will withhold an unspecified part of the funding for Alaska Native Corporations "until pending litigation relating to their eligibility is resolved" after a D.C. federal judge on April 27 issued an injunction preventing the government from sending any of the CARES Act funds to the ANCs, but stopped short of awarding federally recognized tribes all the money.

The Treasury Department — which missed an April 26 statutory deadline in the CARES Act to distribute the funds — suggested that the ongoing suit may have contributed to the delay, saying the litigation "has introduced additional uncertainty into the process of implementing the allocation and making payments to the tribes, but Treasury is endeavoring to make payments of the remaining amounts as promptly as possible consistent with the department's obligation to ensure that allocations are made in a fair and appropriate manner."

The department said that the other $3.2 billion in direct tribal CARES Act funds will be distributed based on different data: the number of employees of each tribe "and any tribally-owned entity," as well as each tribe's expenditures to deal with the coronavirus outbreak.

Treasury didn't say exactly when those payments will be forthcoming, only that they "will be made at a later date" and that the department "will work with tribes to confirm employment numbers and seek additional information regarding higher expenses due to the public health emergency."

Mnuchin said in the statement that the distribution plan is "based on the fair balancing of tribal needs."

Although tribal negotiators had sought $20 billion in funding in the CARES Act, tribes still secured important funding with the $8 billion "tribal stabilization fund" to cover costs incurred fighting the virus from the Treasury Department, in consultation with the U.S. Department of the Interior's Bureau of Indian Affairs.

But tribes were left in limbo, seeing the money held up while several tribes challenged Treasury's plan to include the for-profit ANCs in the distribution.

U.S. District Judge Amit P. Mehta ruled on April 27 that the Confederated Tribes of the Chehalis Reservation and more than a dozen other federally recognized tribes were likely to win on their claims that the ANCs didn't qualify as tribal governments entitled to the funding.

However, the judge stopped short of awarding the 574 federally recognized tribes all the money, saying Treasury could retain whatever funds it calculated should go to the ANCs until the suit is done.

Tuesday's announcement provided the clearest look yet at Treasury's plans and its intention to provide funds to ANCs.

"We signaled to the court last Friday that we would take additional legal action if the payments were not immediately forthcoming this week, so we are pleased that the department is moving forward with the distribution to tribal governments," Lisa Koop Gunn of the Tulalip Tribes, who represents the federally recognized tribe in the litigation, said in a statement Tuesday.

Another suit has already been filed over the government's delay in sending out the funds, with the Agua Caliente Band of Cahuilla Indians in California, the Ak-Chin Indian Community in Arizona and other tribes saying Mnuchin must immediately disperse the full $8 billion in coronavirus relief funding promised to tribes.

Eastern Band of Cherokee Indians Principal Chief Richard Sneed said in a statement Tuesday that he was "grateful" to Mnuchin and Bernhardt as well as President Donald Trump for working to send out the funds.

"While much work remains to be done, we appreciate their thoughtful approach to navigating a thorny issue and look forward to working with them to resolve other outstanding issues," Sneed said.

Meanwhile, the White House in a statement Tuesday played up Trump's support for Native American communities, saying the $4.8 billion distribution "will be one of the largest programmatic investments in Indian Country in our nation's history."

The White House also said the administration "has rapidly delivered critical medical supplies to Native Americans communities in need," pointing to testing equipment distributed through the Indian Health Service and 50 ventilators sent to the Navajo Nation.

The Navajo Nation, which has been especially hard hit by COVID-19, is one of several tribes that has joined in the Chehalis tribe's suit.

At a roundtable with tribal leaders, lawmakers and administration officials on Tuesday in Arizona, including Navajo Nation Vice President Myron Lizer and Gila River Indian Community Gov. Stephen Roe Lewis, Trump said that the Navajo Nation would receive $600 million in the distribution.

"That's a lot. Should I renegotiate that? Can we renegotiate that?" Trump asked. "I don't think so."

"Only if we go up," Lizer said.

Lizer also said that "the numbers are still rising" connected with the coronavirus, as the tribe has had more than 2,400 cases and 73 deaths on the largest Native American reservation, which spans parts of Arizona, New Mexico and Utah, "and that's too many."  

Lewis later told Trump that tribes "can't wait for that litigation to end before additional payments are made to us from the fund," and asked the president to "please direct Treasury to make these payments as soon as possible."

He also called for "a limit or cap on the total funding any one tribe receives" to provide more funds to other tribes — Trump earlier said Gila River will receive $40 million in the current distribution — and said that the $8 billion fund "is going to be woefully inadequate to meet ... our overall needs."

Sen. Tom Udall, D-N.M., vice chairman of the Senate Committee on Indian Affairs, slammed the Trump administration's move in a statement Tuesday as "the definition of 'too little, too late.'"

"It is a change to see that the White House is touting funding for tribes that they and Republican leadership fought tooth and nail against during CARES Act negotiations, and that we Democrats had to fight to deliver," Udall said in a statement Tuesday.

"Hopefully, the Trump administration and Senate Republican leadership have come to appreciate why this funding is so urgent for Native communities, and it will not be so difficult in the future to secure needed relief for Indian Country."

Udall also said that the administration has made the COVID-19 fight harder for tribes by preventing Native communities from benefiting from the CARES Act Provider Relief Fund "despite the fact that some parts of Indian Country, like the Navajo Nation, have some of the highest coronavirus infection rates in the U.S."

"All $8 billion of the tribal relief fund — and not a dollar less — needs to get out the door, on the ground, and into the right hands immediately. And the administration must stop deploying COVID-19 resources in a way that systemically excludes tribes and Native communities," Udall said.

The chairman of the Senate Committee on Indian Affairs, Sen. John Hoeven, R-N.D., said in a statement Tuesday that he had worked with fellow senators, including Martha McSally, R-Ariz., and Steve Daines, R-Mont., "to ensure these relief funds were available to provide direct assistance to mitigate, prevent, and respond to the impacts of COVID-19."

"I encourage both Secretary Mnuchin and Interior Secretary Bernhardt to continue their outreach with the tribes as they work to distribute the remaining dollars within the relief fund," Hoeven added.

Hoeven said that based on the population distribution formula Treasury plans to use, tribes in his home state of North Dakota would receive a total of $109 million, with the largest figure, $44 million, going to the Turtle Mountain Band of Chippewa Indians.

Representatives for Treasury and the DOI, the plaintiff tribes and several ANCs did not immediately respond to request for comment Tuesday.

--Additional reporting by Stephen Cooper and Andrew Kragie. Editing by Michael Watanabe.

Update: This story has been updated with comments from President Donald Trump's roundtable Tuesday with leaders of the Navajo Nation and the Gila River Indian Community.

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