By Joyce Hanson

Law360 (September 2, 2020, 8:08 PM EDT ) A Native American tribe has decried the federal government's bid to dismiss its lawsuit in D.C. court alleging a discriminatory distribution policy denied it a "fair" disbursement of CARES Act funding, saying the government is resorting to procedural arguments rather than disputing its claims.

The Oklahoma-based Shawnee Tribe pressed its claim Tuesday that the U.S. Treasury Department selected an unfair methodology for allocating funds under the Coronavirus Aid, Relief and Economic Security Act based on "false" population data and acted arbitrarily and capriciously under the Administrative Procedure Act in determining that the tribe has a population of zero when it actually has more than 2,100 enrolled members.

Although the D.C. federal court on Aug. 19 denied the Shawnee Tribe's bid for a preliminary injunction to force Treasury to retain $12 million in COVID-19 funding the tribe claims it's owed, the tribe said the court also recognized that it was "irreparably harmed" and declined the government's invitation to dismiss the suit.

"Defendants [on Aug. 27] filed a two-page motion that does not dispute or challenge the facts alleged as set forth in the verified complaint, and in essence, argues this lawsuit should be dismissed in its entirety merely because the court denied injunctive relief under a distinctly different legal standard and their selection of methodology remains within their sole discretion," the tribe said in its Tuesday opposition filing.

The government's Aug. 27 motion to dismiss argued the court has already reviewed two rounds of briefing and participated in two oral arguments, "and twice found that the plaintiff was unlikely to prevail on the merits of this claim since the relevant statutory provision commits the selection of an appropriate allocation methodology to Treasury's discretion."

In its preliminary injunction bid, the tribe had claimed it was underfunded in an initial $4.8 billion distribution of the CARES Act funding due to Treasury's use of the "false" population data. However, U.S. District Judge Amit P. Mehta's Aug. 19 ruling said the court has no say over how the government decides to divvy up $8 billion in CARES Act funds for tribal governments.

Judge Mehta, who has handled several suits connected with the tribal funding under the CARES Act, said the Shawnee Tribe's argument "fares no better" than the Prairie Band Potawatomi Nation's earlier effort for an injunction, which the judge rejected in June.

The judge said that while the Shawnee Tribe claimed Treasury's use of Indian Housing Block Grant data from the U.S. Department of Housing and Urban Development wasn't just flawed — as the Prairie Band had argued — but "objectively false" because it showed the Shawnee Tribe as having no members, Treasury Secretary Steven Mnuchin still has the latitude to use that data as he sees fit to determine what each tribe should receive.

"The secretary's selection of the HUD tribal population data set, however imperfect it may be, is a discretionary agency action that is not subject to judicial review," according to the Aug. 19 opinion.

Judge Mehta said the APA doesn't presume that Mnuchin's funding allocation can be reviewed, as the Shawnee Tribe contended, and that in the D.C. Circuit there is instead a "presumption of non-reviewability" that the court applied "just as it did in Prairie Band."

And, the judge said, setting aside money for the Shawnee Tribe would keep it back from Alaska Native corporations, known as ANCs, who the judge ruled in July should receive a share in the funds but haven't yet received any payments while a group of federally recognized tribes challenge that decision in the D.C. Circuit.

The Treasury Department paid out the initial $4.8 billion of the CARES Act funds to tribes based on the HUD population information starting May 5, well after a 30-day deadline to do so had passed following the March 27 enactment of the law.

On June 11, Judge Mehta rejected the Prairie Band's bid to stop the remaining $3.2 billion in COVID-19 relief from being paid to tribes, saying the Nation hadn't shown that funding to all tribes should be held up to let the Nation pursue claims that it was shortchanged millions of dollars in the population-based distribution.

In his opinion denying the Prairie Band's injunction request, the judge said he didn't have jurisdiction to hear the tribe's challenge to Treasury's plan to distribute the funds, saying the CARES Act "does not require the secretary to even consider population data, let alone population data of a particular kind."

And on June 29, the judge ruled in a suit by the Confederated Tribes of the Chehalis Reservation and other tribes that the for-profit ANCs qualify as "Indian tribes" eligible for funding under the CARES Act. That ruling is on hold while the tribes pursue an expedited appeal with the D.C. Circuit, with oral arguments set for Sept. 11.

Representatives for the Shawnee Tribe and the federal government were not immediately available for comment Wednesday.

The Shawnee Tribe is represented by Pilar Thomas, Jonathan P. Labukas and Nicole L. Simmons of Quarles & Brady 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 Andrew Westney. Editing by Marygrace Murphy.

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