By Andrew Westney

Law360 (June 21, 2021, 8:31 PM EDT ) The Prairie Band Potawatomi Nation and the Miccosukee Tribe of Indians of Florida have told a D.C. federal judge that they were again shortchanged by the Treasury Department's distribution of panedmic relief funds when the department tried to fix problems with an earlier payout.

The federally recognized Prairie Band and Miccosukee Tribe told the court that a May distribution by the Treasury Department was supposed to provide more money to tribes that weren't afforded enough funding in a May 2020 distribution, which the D.C. Circuit found relied on population data that fell far short of tribes' true membership numbers.

"But good intentions are not by themselves enough for lawful and sound decision-making," the Prairie Band and Miccosukee Tribe said in an amended motion for summary judgment Friday. "The revised methodology, far from remedying problems with the first, simply introduced a host of problems of its own."

While Title V of the Coronavirus Aid, Relief and Economic Security, or CARES, Act requires the federal government to share $8 billion for tribal governments based on their increased spending due to the pandemic, the 2021 distribution was "based on the percentage by which a tribe's enrollment was undercounted in the 2020 distribution, a figure that has no cognizable connection to actual increased expenditures or to Treasury's previously announced proxy for increased expenditures: tribal population, or enrollment," the motion said.

That led some tribes — including fellow plaintiff Shawnee Tribe — to receive "huge awards" in the 2021 payout, while the Prairie Band "receives just a fraction of the amount which it would have been owed if an enrollment-based allocation had been used," according to the motion.

The Shawnee Tribe will get about $5.3 million through the two distributions for a population of just over 3,000, while the Prairie Band will get about $3.3 million total even though its population is over 4,500, according to the motion.

"Even if Treasury could somehow square the revised methodology with the statute's requirements, which it cannot, such gross, unjustified disparities among parties that are similarly situated renders its decision-making arbitrary and capricious regardless," the Miccosukee Tribe and the Kansas-based Prairie Band said.

In May 2020, the Treasury Department paid out $4.8 billion, or 60%, of the CARES Act funds to tribes based on population information, and then almost all the remaining funds in June 2020 based on employment and expenditure data.

In its June 2020 complaint, the Shawnee Tribe told an Oklahoma federal court that it wouldn't get the funds it was due under the March 2020 coronavirus relief bill because then-Treasury Secretary Steven Mnuchin had decided to use Indian Housing Block Grant population data as a guide to determine allotment but that the data was not up to par.

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

While the department had argued it had the latitude to distribute the $8 billion in funds as it saw fit, the CARES Act required Mnuchin to make sure payments to tribes were based on their "increased expenditures" due to the pandemic, the D.C. Circuit ruled.

And the department's reliance on Indian Housing Block Grant population data — which showed the Shawnee Tribe as having zero members, rather than the over 3,000 members the tribe reported to the Treasury — for part of the funding meant the Oklahoma-based tribe's minimal award of $100,000 may have been much less than its pandemic-related spending, according to the circuit panel.

While the panel didn't rule on the merits of the case, it reversed the lower court's denial of a preliminary injunction to the Shawnee Tribe and ordered it to issue one. The lower court later issued preliminary injunctions with respect to funds for the Prairie Band and Miccosukee Tribe as well in the consolidated litigation. 

In their filing Friday, the Prairie Band and Miccosukee Tribe said that Treasury's 2021 awards of funding, which were meant to adjust for the D.C. Circuit decision, "are at least as, if not more so, arbitrary than the first set of awards."

This year's supplemental payouts are based on the ratio of the tribe's population to its actual enrollment numbers, but that approach "has no coherent connection to the statute, is undermined by the actual enrollment data Treasury has on hand, and ... treats similarly situated parties differently," according to the motion.

The 2021 distribution's awarding of the largest new payouts to the tribes with the highest ratio of tribal population to enrollment — those who had a population number of zero in the Indian Housing Block Grant data used in the first distribution — didn't have anything to do with the CARES Act's purpose to cover COVID expenses, but instead were meant to redress "what Treasury deemed its biggest qualitative mistakes."

"While Treasury was right to recognize its mistake, it was wrong to arbitrarily favor the tribes for which Treasury believes it was most mistaken," according to the motion.

The Prairie Band was ranked in the top 15% of tribes based on that ratio, and only that group received a second distribution, according to the motion.

But instead of making the new payout to that entire upper group of tribes based just on enrollment data, Treasury's approach favored the tribes at the very top of the list, like the Shawnee Tribe, leading to "absurd results that should have been obvious to Treasury," according to the motion.

That includes the $5.2 million award in 2021 to the Shawnee Tribe, the motion said. The Miccosukee Tribe, which also had a population of zero in the IHBG figures, didn't receive as much as the Shawnee Tribe did per member in 2021 for those left out of the IHBG data, but still fared much better per member than the Prairie Band in the new distribution, according to the motion.

Representatives for the parties did not immediately return requests for comment Monday.

The Shawnee Tribe is represented by Quarles & Brady LLP.

The Prairie Band Potawatomi Nation is represented by Lippes Mathias Wexler Friedman LLP.

The Miccosukee Tribe of Indians of Florida is represented by Alston & Bird LLP.

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

The cases are The Shawnee Tribe v. U.S. Department of the Treasury et al., case number 1:21-cv-00012; Prairie Band Potawatomi Nation v. U.S. Department of the Treasury et al., case number 1:20-cv-01999; and The Miccosukee Tribe of Indians of Florida v. U.S. Department of the Treasury et al., case number 1:20-cv-02792, all in the U.S. District Court for the District of Columbia.

--Additional reporting by Nadia Dreid and Melissa Angell. Editing by Gemma Horowitz.

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