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'Arbitrary and capricious': Study casts doubt on Trump administration's COVID-19 payments to tribes

Monday, May 18, 2020

By Acee Agoyo

As tribes continue to fight for the $8 billion in coronavirus relief they were promised more than seven weeks ago, new research is casting doubt on the accuracy and fairness of the Trump administration's handling of the fund.

According to a team of experts in Indian law and policy, the payments distributed so far have been "arbitrary and capricious" despite claims of transparency from the Department of the Treasury. Tribes have received COVID-19 relief monies that don't adequately reflect their citizenship base, the researchers said on Monday.

"The case is strong that an appropriate allocation rule would employ the current tribal enrollment figures submitted by tribes to the Treasury Department in mid‐April," researchers from the Harvard Project on American Indian Economic Development and the Native Nations Institute at the University of Arizona said.

Under threat of federal prosecution, tribes submitted enrollment figures and other data to the U.S. government in anticipation of receiving shares of the $8 billion coronavirus relief fund. Amid intense scrutiny in the media, Congress and the courts, Treasury changed course on May 5 and said it was going to base the first round of payments on Indian housing data maintained by an entirely different federal agency.

Yet some of the leading scholars in Indian Country economic development and governance found that using such data produced "widely and wildly differing allocation results," the new report shows. Their work indicates that some tribes received payments below what they should have gotten -- but it's not possible to tell because it's not clear how Treasury arrived at the amounts that have already been sent out under the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act.

"Each such data series results in arbitrary and capricious allocations of the CARES Act monies," Randall K.Q. Akee, Eric C. Henson, Miriam R. Jorgensen and Joseph P. Kalt write in their study.

For example, the Sault Ste. Marie Tribe of Chippewa Indians, based in Michigan, received $37,217,392, Chairperson Aaron Payment said on social media last month. But using publicly-available Indian Housing Block Grant (IHBG) data, the researchers said the largest Indian nation east of the Mississippi should have gotten a higher amount of $41,861,894. That's a difference of 11.7 percent.

The Sault Ste. Marie Tribe of Chippewa Indians, the largest Indian nation east of the Mississippi, has received $37.2 million from the #CoronavirusReliefFund. #CARESAct #Coronavirus #Michigan https://t.co/ZU1GsQjXwA
— indianz.com (@indianz) May 6, 2020

The Ak-Chin Indian Community, based in Arizona, received $3,014,850, according to a declaration filed in federal court by Treasurer Brandon Peters. The tribe should have gotten $3,391,336 if the researchers' calculations are correct. That's a difference of nearly 11.8 percent.

The Agua Caliente Band of Cahuilla Indians also falls into the same under-calculation category. The California-based tribe should have gotten $1,581,814, based on the data used by the experts, but was paid $1,407,382, according to a declaration from Chief Executive Officer Max Ross. The difference was about 11.7 percent.

"With regard to the credibility – i.e., ability to avoid arbitrary and capricious results – of the various HUD racial population count series, we have seen above that different series yield widely different outcomes," the researchers write of Treasury's reliance on data maintained by the Department of Housing and Urban Development, which in turn is based on figures from the U.S. Census Bureau

Had Treasury instead gone with tribal enrollment instead of HUD data, the payments under Title V of the CARES Act would have been far different, according to the researchers. The Cherokee Nation, which is one of the two largest tribal governments, missed out on a whopping $308.2 million because because its citizenship is larger than the local housing population in northeastern Oklahoma.

After much debate, media scrutiny and a national lawsuit, the Trump administration is finally distributing #CARESAct #Coronavirus relief funds to tribal governments, but it is far from payment in full, as promised. @ChuckHoskin_Jr @CherokeeNation #COVID19 https://t.co/qGsP2s6PYW
— indianz.com (@indianz) May 18, 2020

The Choctaw Nation, in southeastern Oklahoma, lands in the same boat. According to the researchers, the southeastern Oklahoma tribe missed out on an additional $329.6 million in CARES Act funding -- the largest of any Indian nation.

"As we have argued above, accurate tribal enrolled citizen counts measure the population to which tribal governments are responsible and over which they have jurisdiction," the study states. "Title V’s explicit focus on the stabilization of tribal governments makes it logical to base any population‐derived allocation of Title V funds on the actual populations of enrolled citizens."

The policy experts note that it's too late for the Trump administration to go back and adjust any payments. Some $4.8 billion, representing 60 percent of the $8 billion, was set aside for the initial round. As of May 14, $4.67 billion has already been sent to tribal governments, according to the most recent Daily Treasury Statement.

"Notwithstanding these observations, at this point, with CARES Act Title V monies already being dispersed under Treasury’s formula, it seems unlikely that Treasury could or would engage in some clawing back and adjustment of already‐distributed monies in order to remedy arbitrary and capricious aspects of its initial formula," Akee, Henson, Jorgensen and Kalt write.

Since Treasury has yet to determine how to allocate the remaining $3.2 billion, or 40 percent of the coronavirus relief fund, the researchers argue there is still time to do the right thing.

"Treasury should consider utilizing this forthcoming round of further allocations as a means of remedying the problems created by its first‐round formula, offsetting over‐compensations and under‐compensations revealed by application of a revised first‐round formula that is based on use of the portal‐submitted data on enrolled citizen population counts," the study reads.

Please join @nafoaorg and @NCAI1944 on May 18, 2020, for a #CoronavirusReliefFund discussion. @USTreasury will be on hand to explain how remainder of $8 billion in #COVID19 relief promised to tribes more than a month ago will be distributed. #Coronavirus https://t.co/o3v2l2YKLU
— indianz.com (@indianz) May 18, 2020

There is little indication that Treasury will listen to the recommendation, despite having already heard complaints about the first round of CARES Act payments. During a May 7 conference call organized by the White House, a number of tribal leaders said the use of Indian housing data cut their people short, several participants told Indianz.Com.

Some tribal governments, either out of their own choosing, lack of capacity to do so or for other reasons, hadn't applied for Indian housing grants in fiscal year 2020, the data which Treasury said it utilized in making CARES Act payments. As a result, several of these tribes only received $100,000, regardless of their actual population or citizenship base.

Other tribes have "0" as their Indian housing population count and since the deadline to challenge the data already passed on March 30, only three days after President Trump signed the CARES Act into law, there is no way it can be changed. These governments also received $100,000.

The complaints were directed to Daniel Kowalski, the high-ranking official at Treasury who was placed in charge of the CARES Act distribution. Though he provided remarks at the beginning of the May 7 teleconference, he was absent for most of the portion in which tribal asked questions about the decision to go with Indian housing data, participants told Indianz.Com.

"It was decision we made," Kowalksi said during the initial portion of the call, according to several participants. "Ultimately, I think it's the right decision and it's a decision that will stand."

Ready for round two? Tribes have to submit even more information to the Trump administration before they get the rest of the $8 billion in #COVID19 relief promised almost two months ago. #CoronavirusReliefFund #CARESAct #Coronavirus #8BillionQuestions https://t.co/WO2MPSSSBs
— indianz.com (@indianz) May 17, 2020

Before the CARES Act study was officially released, Treasury already laid out the criteria it will be using for the remaining $3.2 billion of the coronavirus relief fund. Starting this week, tribes will be required to submit employment and expenditure information in order to claim their shares for money they were initially promised would be released all at once.

"Tribal governments, including Cherokee Nation, have been on the front lines of the COVID-19 public health response just as state and local governments have," Chief Chuck Hoskin Jr. said in an opinion published on Indianz.Com on Monday. "We’ve suffered crippling economic effects, and we deserve to join states and other governments in the timely and fair distribution of COVID-19 recovery funds."

"This delay has left tribes in limbo, even as we struggle to retain employees and provide essential services such as health care, food, housing and small business assistance to citizens during the COVID-19 pandemic," Hoskin added.

But there are signs the Trump administration is listening -- at least to a federal judge who expressed concerns about further delays in distributing the remaining $3.2 billion. During the May 7 call, Kowalski had said it could take up to "two months" for tribes to get their funds.

Daniel Kowalski of the Department of the Treasury is addressing the National Congress of American Indians. He serves as counselor for the Secretary of the Treasury. #ECWS19 pic.twitter.com/3GgCKtnxaO
— indianz.com (@indianz) February 12, 2019

Karen Fierro, the self-governance director for the Ak-Chin Indian Community, disclosed the potentially lengthy timeline as part of a CARES Act lawsuit in which her tribe is a plaintiff. She had been on the call and was troubled by yet another delay.

"I have followed news about the disbursement of tribal CARES Act funding closely and participated in other calls with federal officials discussing this funding, including consultation calls on April 2 and 9, 2020, and the estimates of when it will be disbursed have gotten longer and longer," Fierro said in a sworn declaration.

Judge Amit P. Mehta was clearly disappointed too even as he declined to order Treasury to move faster

A "months-long delay," a May 11 decision in the case read, "will not be acceptable."

Kowalski, who serves as Counselor to Secretary of the Treasury Steve Mnuchin, provided an updated timeline as part of the lawsuit, whose plaintiffs also include the Cherokee Nation and the Choctaw Nation, the two tribes that missed out on hundreds of millions of dollars during the first round, according to the new research. Payments will go out as soon as June 5, he said.

"In determining the amount of time to allow the tribes to prepare and submit the data necessary for Treasury's allocation, Treasury balanced the potential burden of a relatively compressed timeframe to respond against tribes' immediate need for these funds during this public health emergency," Kowalski said in the affidavit filed on Friday.

Cherokee Nation's emergency elder food distribution program continued today in Locust Grove, with the tribe providing...
Posted by Cherokee Nation on Thursday, May 14, 2020

On the same day the declaration was filed, Treasury released a new document. Titled “Guidance to Tribes for Completing Supplemental Request for Information,” it explains what information will be needed before Treasury distributes the remaining $3.2 billion in the fund in about two weeks.

“This information will be required to be submitted by tribal governments through an electronic form that will be made available on Treasury’s website early in the week of May 17,” the document reads. “The required information should not be submitted to Treasury other than through the electronic form. Treasury expects to require the requested data to be submitted by 11:59 pm Alaska Daylight Time on May 26, 2020. The submission deadline will be confirmed when the online portal is opened next week.”

For employment, applicants must show how many people are employed by the tribe itself and by tribal entities. Treasury wants to know the numbers for each quarter of calendar year 2019, suggesting any fluctuations might be taken into consideration in determining how to distribute the $3.2 billion.

For expenditures, applicants must submit “Total governmental expenditures” for fiscal year 2019. They also must show “Total amount of federal financial assistance,” suggesting that federal funds already provided might also be taken into consideration.

Deputy Chief Warner, Dr. Montgomery on the importance of masks
Please see this special message from Cherokee Nation Deputy Principal Chief Bryan Warner and Cherokee Nation Health Services Medical Director Dr. Roger Montgomery on why staff and visitors are asked to help protect one another by wearing face masks when government facilities begin reopening in phases June 1. #gadugi
Posted by Cherokee Nation on Monday, May 18, 2020

Cherokee Nation: Reopening Safely

Due to litigation in another CARES Act lawsuit, only federally recognized tribal governments have received their shares of the $4.8 billion. Treasury has told a federal judge that it is withholding payments for Alaska Native corporations, whose eligibility to receive money remains in dispute.

A final decision has not been reached. But since Treasury considers Alaska Native corporations to be eligible for the coronavirus relief fund, they should be able to submit information for the remaining $3.2 billion.

During the May 7 call, Kowalski indicated the allocation method for distributing the $3.2 billion was dependent on resolving the eligibility issue, Fierro said in her court declaration. It's not clear how Treasury has determined how to start making payments on June 5 when a decision in the case has not been reached.

Treasury has not responded to a request for comment about the forthcoming CARES Act process. The request was placed last Thursday.

According to a government attorney, Treasury was withholding about $162.3 million for Alaska Native corporations. The figure was presented during a court teleconference on May 8.

According to the latest Daily Treasury Statement, $4.67 billion has been withdrawn from the coronavirus relief fund in May so far. Assuming a total of $4.8 billion is supposed to be distributed from the first round, $130 million is unaccounted for at this point.