By Andrew Westney

Law360 (May 11, 2020, 9:52 PM EDT ) A D.C. federal judge on Monday rejected a bid to force the Treasury Department to deliver $3.2 billion it still owes tribal governments to fight the COVID-19 pandemic, but said a further delay of two months "will not be acceptable" and one month past a lapsed deadline might be pushing it.

U.S. District Judge Amit P. Mehta ruled the Agua Caliente Band of Cahuilla Indians and other tribes hadn't shown Treasury's failure to deliver the full $8 billion it owes tribes under the Coronavirus Aid, Relief and Economic Security Act had gone so far past the law's April 26 deadline that he should compel the department to send the money.

The judge said Treasury's move last week to pay out an initial $4.8 billion of the CARES Act's "tribal stabilization fund" and its other efforts to get the money distributed showed that the government wasn't just wasting time. However, Judge Mehta suggested that Treasury's timetable to send out the remaining $3.2 billion — which entails a more complicated process than the first distribution — should be shorter if it wants to avoid the court stepping in.

Treasury Secretary Steven Mnuchin doesn't "enjoy[] an indefinite period to carry out Congress's command," the judge wrote in his opinion, and a Treasury official's indication last week that it might take two more months for the remaining money to go out "will not be acceptable."

The judge also said that the question whether the department's delay is egregious enough to warrant the court's intervention "becomes a closer one than it is today" if it approaches doubling the time allowed by the law, which would happen May 26.

The Agua Caliente Band of Cahuilla Indians in California, the Ak-Chin Indian Community in Arizona and six other tribes filed an amended complaint May 3, saying they would suffer irreparable harm, including cutting off essential services and laying off staff, unless Mnuchin immediately disbursed the $8 billion in direct tribal coronavirus relief funding in the $2 trillion CARES Act.

The tribes meet the irreparable harm threshold for a preliminary injunction and temporary restraining order because "many tribal members and non-members alike rely on tribal enterprises for employment and health insurance," and also merit a writ of mandamus ordering Mnuchin to fulfill his duty, according to the complaint.

Since then, Treasury announced its plan to distribute the money, saying May 5 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 Tuesday and was mostly distributed by Friday, 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 hearing Friday.

The remaining $3.2 billion will 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.

Lynch said in the hearing it would take "weeks, not days" to deliver the full $8 billion.

In his ruling Monday, Judge Mehta said the April 26 deadline to distribute the entire $8 billion was "not merely aspirational but a date certain by which Congress expected the Secretary to act," but missing the deadline "does not ... in itself warrant judicial intervention."

"Under a rule of reason, missing a deadline but meeting it in part nine days later does not evince 'egregious' agency delay that warrants mandamus relief," the judge said.

Applying the D.C. Circuit's so-called TRAC standard for assessing mandamus applications, established in  Telecommunications Research & Action Center v. FCC , judge said the tribes hadn't shown Treasury's delay had gone on too long "thus far."

"But that does not mean the Secretary enjoys an indefinite period to carry out Congress's command," the judge said. "This matter remains pending, and plaintiffs are free to renew their motion should the Secretary continue to delay in distributing the remaining emergency funds."

While the tribes are "rightly upset" that Treasury' work "did not result in timely payments," the judge said, "agency action that fails to achieve optimal output does not automatically justify court intervention."

"'Egregious' delay is the governing standard, and the Secretary is not there quite yet, even in the midst of a public health crisis," according to the opinion.

Judge Mehta said he will expect updates on the department's progress, with the first report due Friday.

Kilpatrick Townsend & Stockton LLP, which represents the tribes, said in a statement Monday that the tribes' suit was meant "to speed up the disbursement of desperately needed COVID-19 relief funding to Indian Country" and "has now met its goal in two ways."

"First, it forced Treasury to finally, albeit belatedly, release the first 60% of the $8 billion that Congress appropriated for Tribal governments," the firm said. "Second, Judge Mehta's order makes crystal clear that Treasury will have to significantly accelerate its timeline for releasing the remaining 40% of the funding."

"We, along with the court, will be closely following Treasury's progress and will not hesitate to renew our motion for immediate relief if Treasury continues to drag its feet," the firm said.

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

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 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 Breda Lund.

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