Treasury withholding $679M in virus relief funds for tribes

FLAGSTAFF — The U.S. Treasury Department is withholding $679 million in coronavirus relief funding for tribes while a challenge over its initial round of payments to tribal governments plays out in court.

The money is part of $8 billion that Congress set aside for tribes. The federal rescue package was approved in late March with a deadline for the funding to be distributed to tribes by April 26.

The payments were delayed as the Treasury Department grappled with methodology. It decided to use federal tribal population data for the initial $4.8 billion distribution to 574 federally recognized tribes in early May. Much of the remaining $3.2 billion based on tribes’ employment and expenditure data went out Friday, the department said.

As part of the legal wrangling, the Prairie Band Potawatomi Nation in Kansas argued it was shortchanged $7.65 million because the Treasury Department relied on federal population data, rather than the tribe’s own enrollment figures to calculate its share of the money.

A federal judge denied the tribe’s request to halt further distribution of the money last week, saying the Treasury Department has discretion in determining how to allocate the money. Attorneys for the tribe said Monday they are appealing the ruling.

The Treasury Department contends that the $679 million being withheld will cover the Kansas tribe if it wins its case and any other tribes that might raise challenges. That amounts to the difference between relying on data from the U.S. Department of Housing and Urban Development and the enrollment figures submitted by tribes.

“It’s a means of ensuring that Treasury has actually determined an appropriate amount and paid an appropriate amount,” U.S. Department of Justice attorney Jason Lynch, representing the Treasury Department, said during a hearing in a related case Monday.

In that case, tribes renewed a request to force the Treasury Department to disburse the remaining money immediately.

Keith Harper, who is representing several tribes, suggested the Treasury Department instead withhold only the amount in question for the Prairie Band.

“The tribes have only until the end of this year to figure out how to spend these funds, and they can’t even make decisions on planning how to utilize these funds,” Harper said. “Every day that goes by is further difficulties for these tribal plaintiffs.”

An undisclosed amount also was reserved for Alaska Native corporations in case the court rules in favor of the Treasury Department in a lawsuit brought by tribal nations over eligibility.

U.S. District Judge Amit Mehta in Washington, D.C. is overseeing all the cases, some of which have been consolidated.