Tribes alarmed by Treasury Department’s handling of $20B American Rescue Plan funds

WASHINGTON — A bevy of tribal leaders are reaching out to top U.S. Department of Treasury officials with hopes of getting several spending compliance rules changed involving the $20 billion in American Rescue Plan funds designated for tribes.

The request is just one of a number of pressing concerns that tribes are concurrently raising with Treasury. They’re also citing worries centered on equity issues involving employment-based allocations to tribes under the law, questions over how Treasury came up with its basic definition of which tribes should receive funds, as well as an overarching call for a top-level tribal liaison office and permanent staff institutionalized at the highest levels of the department. 

[RELATED: Tribes say Treasury’s American Rescue Plan employment-based formula creates inequity] 

If that last issue had been addressed long ago, tribal leaders and advocates say that a number of the problems currently underway at Secretary Janet Yellen’s cabinet agency could have been alleviated or even avoided. And President Joe Biden’s commitment to equity for all tribes would be on more solid footing. 

Libby Washburn, the president’s special assistant for Native Affairs, is said to be monitoring the situation closely; she has personally sat in on some virtual sessions Treasury held with tribes.

“As they say, an ounce of prevention is worth a pound of cure, and the right person in such a position could do wonders to help the Treasury Department improve the lives of Native peoples throughout the United States,” Robert Odawi Porter, former president of the Seneca Nation of Indians, told Tribal Business News. “Secretary Yellen should absolutely create a permanent, high-level position at the Assistant Secretary level or above to focus on interactions with tribal nations and Alaska Natives.” 

“Since the Treasury Tribal Advisory Committee was established by Congress in 2014, Treasury now has a statutory obligation to focus on Indian Country development and related policy considerations,” noted Porter, who is now a lawyer for tribes with the Capitol Hill Policy Group. “And, of course, the COVID-19 relief legislation has put Treasury at the heart of conflict over distributing those funds.”  

With July 16 set by Treasury as the final date for tribal leaders to submit information to receive final distributions, a flurry of activity is taking place on all of the above issues by tribes, advocacy organizations, lawyers, lobbyists and members of the U.S. Congress. 

Basic questions, ‘uncommon’ answers

Despite ongoing tensions, Treasury maintains that sometime in August will be its final deadline to send out the last of the money to tribes. Almost $7 billion of the total tribal ARP money is still on the table. 

Treasury reported that as of July 2, 128 tribes had successfully submitted all required information, including employment numbers, to its online portal. 

There are 574 federally recognized tribes, and Treasury has allowed up to 608 entities that it determines to be tribal governments to receive a portion of the funds. Even that basic issue is under scrutiny, however, because Treasury and the U.S. Congress used the Federally Recognized Indian Tribe List Act of 1994, maintained by the U.S. Department of the Interior, to distribute the first $1 billion stream of ARP funds to tribes. 

Every additional tribe counted by Treasury serves to divide the pot of money further, so having an accurate list is important, according to many tribes. 

“It’s like a ‘no duh’ kind of issue,” one tribal executive said.

The list in its current form is confusing even to tribal legal experts, some of whom have gone over it in detail and count 582 tribes, while some have found more and some have found less, depending on which tribal bands are counted. One source of confusion is that some tribal bands are listed in parentheses, and at least one appears to be listed twice. The list seems to contain some amount of clerical and formatting errors, including odd indentations, so the fact that Treasury has depended on it to apportion major relief funding has been but one of the perplexing parts of the distribution.

Treasury has indicated during virtual calls with tribal leaders that the department will not disclose the numbers upon which they made their final calculations for all three streams of ARP funding to tribes. The department has stated that even the aggregate total of nationwide certified tribal enrollment was sensitive data and would not be disclosed. 

A Treasury official shed some light, telling Tribal Business News by email that the department “adhered to the following definition of Tribal governments specified in Section 602 of the American Rescue Plan Act: The term ‘Tribal Government’ means the recognized governing body of any Indian or Alaska Native tribe, band, nation, pueblo, village, community, component band, or component reservation, individually identified (including parenthetically) in the list published most recently as of the date of enactment of this Act pursuant to section 104 of the Federally Recognized Indian Tribe List Act of 1994 (25 U.S.C. 5131).”  

“This definition of Tribal government is uncommon given its inclusion of entities listed in parentheses in the list published by the Bureau of Indian Affairs,” the Treasury official said. 

Tribal lawyers say that federal agencies in the past have sometimes avoided giving money to bands listed parenthetically, so that Treasury is doing so in this situation sets a precedent to be watched.

“The BIA coordinates the update of the list of Tribes and may have more insights into the process for determining the way in which Tribes are listed in the Federal Register notice,” the official added. “Treasury has engaged with Tribes that have subcomponents to understand the governance structure between the Tribe and its subcomponents for purposes of distributing Coronavirus State and Local Fiscal Recovery Funds.”

‘Nightmare’ compliance rules under fire

Some tribal officials are purposely waiting until the last minute to submit employment data, as they consider Treasury’s proposed compliance rules, which were first issued on June 17. These officials are saying that the department has created overly burdensome guidelines that in some cases are actually more stringent than ones that proved problematic for some tribes under last year’s Coronavirus Aid, Relief, and Economic Security (CARES) Act. 

Treasury’s rules require that for every $50,000 of ARP’s Fiscal Recovery Fund money spent, tribes will have to record monthly reports on how it has been spent, including a 250-word narrative, as well as breakdowns of wages and benefits paid with those dollars. The department further requires attestations of compliance with several federal laws that haven’t usually applied to tribes, along with categorizations of the spent monies from one of 66 categories Treasury has identified.  

For a tribe that receives $40 million in ARP funding, that would amount to 800 compliance reports per quarter for five years. 

“The additional complexity, it’s difficult to understand why it’s necessary,” Will Micklin, CEO of the Ewiiaapaayp Band of Kumeyaay Indians in California, told Tribal Business News. “Our administrative capacity is already tightly attuned to carrying out the operating services to our tribal communities.”

Micklin was previously the executive director of the 32-member California Association of Tribal Governments, and he currently serves as the second vice president of the Central Council of Tlingit and Haida Indian Tribes of Alaska. He said that some smaller tribes already have a difficult time carrying out administrative requirements to meet the basic needs of their tribal citizens, given limited federal funding and having small land bases and no tax collection abilities.

Rules released by Treasury also require tribes to comply with Title VI of the Civil Rights Act as part of their receipt of ARP funding, something that Makah Nation leaders and other tribes have already gone on record with Treasury as opposing. 

That proposal presents an inherent tension with tribal sovereignty, as treaty and trust rights, backed up by federal law, have long allowed tribes to provide services to their tribal citizens in their exercise of self-governance and have allowed for tribal citizen preference in various situations. Title VI “prohibits discrimination on the basis of race, color, or national origin in any program or activity that receives Federal funds or other Federal financial assistance,” so yet another compliance problem is coming to a head.

“Makah objects to efforts by Treasury requiring tribal governments to comply with Civil Rights Law in the administration of tribal ARP funds,” Nate Tyler, Makah Tribal Council Chairman, said during a July 2 meeting with Treasury. “Compliance with Title VI is inconsistent with the treatment of Indians as a political, not racial, classification … and disregards tribal sovereignty.” 

W. Ron Allen, chairman of the Jamestown S’Klallam Tribe, laments that the whole compliance process is “getting complicated,” and he expected better from Treasury for tribes and their sovereignty. 

Allen told Tribal Business News that Treasury’s documentation requirement for each tribal expenditure “is going to be a nightmare for the many tribes who simply do not have the in-house resources to document as they are suggesting in their proposed regs.”

“The Treasury FAQs and subsequent rules that are following the $20-plus billion being sent out to Indian Country are now becoming a huge challenge,” added Allen, a long-time leader with the National Congress of American Indians. “These FAQs and rules are narrowing and interpreting what are allowable expenditures and removing the flexibility criteria to fit the needs of each of the 570-plus Indian communities.  

“Tribes need to push back because they don’t have the resources to comply,” Allen said. “We are asking (Treasury) if ‘contract support funds’ will accompany these funds (to help) tribes to build up their administrative operations. If we have to use the ARP funds, then it diminishes the intended use of the funds.”

CARES lessons unheeded?

Given Treasury’s prior experience with divvying up a large amount of coronavirus relief money to tribes last year, tribes had hoped such complications could have been avoided this time around.

Treasury and U.S. legislators in 2020 had already received intense criticism since some tribes didn’t receive any money under the CARES Act formula because they don’t rely on housing block grants. That law provided $8 billion to tribes using a formula derived from housing block grant numbers from the U.S. Department of Housing and Urban Development. 

Meanwhile, for-profit Alaska Native Corporations are set to receive approximately $450 million of the CARES Act funding as a result of last month’s Supreme Court ruling in Yellen v. Confederated Tribes of the Chehalis Reservation, et al, which found that ANCs were Indian tribes in this instance because of language in the Indian Self Determination Act. A couple of tribes still have lawsuits ongoing against Treasury to try to get what they argue is a more equitable share of CARES Act funding.

Compliance rules under the CARES Act for tribes were generally more lax than those of ARP, although some tribal officials have said that CARES’ reporting and compliance requirements were difficult to carry out during the height of the pandemic, as well as seemed arbitrary. The time limits on spending the CARES monies were a major administrative and practical hurdle, since tribes were initially given only one year to do so under difficult circumstances. The deadline has since been extended to December 31, 2021. 

ARP monies come with a longer timeline to spend — five years — and Treasury devised a formula that would not fund ANCs, instead sending money to tribal governments added by the U.S. Department of the Interior to the Federally Recognized Indian Tribe List Act of 1994. The much maligned housing block grant formula was purposely not used this time around, Treasury officials have said, but the List Act has not been a perfect solution. Some federal lawmakers say they plan to make inquiries about its composition and compilation. 

Spending compliance rules, released by Treasury in a one-size-fits-all approach to tribal, state and local governments, are proving quite problematic for tribes this time around. States and localities may be better situated to cope with the rules, according to some tribal officials.

“It brings in a whole host of additional requirements that did not apply under CARES,” Melanie Fourkiller, a policy advisor with the Choctaw Nation, told Tribal Business News. “That’s really the bottom line of it. And we don’t really understand why.”

“I was quite surprised by the burdensome reporting and compliance requirements coming out of the Treasury,” added Diane Gange, CFO of the Jamestown S’Klallam Tribe. “Especially when it was very clear from all of the consultation sessions done after ARP passed, tribes wanted less cumbersome reporting than CARES.   

“Other than giving us 20 extra days to file the reports, I don’t think we got our ask.”

‘Host another meeting’

Trump administration officials took some fire for CARES Act-related problems, and Biden administration officials are feeling a bit of heat now. However, tribal officials have said Treasury has a more systematic problem in dealing with tribal governments that has spanned many presidential administrations, Republican and Democratic. A lack of meaningful consultation, including a commitment to free, prior and informed consent called for in the United Nations Declaration on the Rights of Indigenous Peoples, remains a constant complaint from tribal leaders.

Wampanoag Aquinnah Chairwoman Cheryl Andrews-Maltais, Gila River Governor Stephen Lewis, Prairie Island Chairwoman Shelly Buck and Fort Belknap Indian Community President Andy Werk Jr. are but a few tribal leaders who have stated in meetings with Treasury that the department needs to do a better job of consulting on various ARP-related matters.

Common criticisms have been that Treasury has indeed hosted listening sessions, but some of them have been plagued by technical difficulties, and they have tended to feature comments from the same small handful of people recognized to ask questions repeatedly during many of Treasury’s tribal meetings. One repeated lament has been that many of the people called on during the sessions appear sympathetic to Treasury, perhaps because of politics, or perhaps because the tribes called on are better equipped to meet the requirements of the department.

On July 2, after tribal leaders started sending in more complaints to Treasury on compliance and other matters, Treasury allowed more critical voices to be heard publicly. Andrews-Maltais was among the voices who spoke during a virtual meeting held that day.

“I do believe we need more consultation on this formula because I believe more tribes need to and want to speak out,” said Andrews-Maltais, who previously served in the Obama administration as a senior adviser to the Assistant Secretary – Indian Affairs.

“Maybe host another meeting,” Makah Tribal Council Chairman Tyler added during the session.

A call for free, prior and informed consent

Treasury officials are well aware of the many concerns being raised by tribal leaders. They noted in various virtual meetings in June that they are hearing and taking in many tribal comments before the July 16 deadline.  

Overseeing the efforts at Treasury have been Nancy Montoya, the department’s Tribal Affairs Program Coordinator, and Casey Lozar, a citizen of the Confederated Salish and Kootenai Tribes, who is serving as a special adviser at the department. Lozar is the director of the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis. 

Fatima Abbas, a Haliwa-Saponi citizen, is serving as a senior adviser to Treasury in the Office of Recovery Programs, and Jim Columbe, a project manager with the Center for Indian Country Development, has been brought into the department as an adviser to help address tribal concerns. 

Chief Recovery Officer Jacob Leibenluf told tribal leaders in a virtual meeting on July 2 that Treasury has made it a priority as part of its implementation of ARP to engage with tribal governments throughout its process. He said his office and the department as a whole “is committed to continuing to build our capacity for that engagement through every step of implementing the ARP.” 

As of July 2, Leibenluf said Treasury had disbursed $13.2 billion to tribal governments, and he deemed that a measure of success, despite many questions from tribes throughout that distribution process that have gone unaddressed. 

When asked to address specific tribal concerns not covered in previous ARP sessions, a Treasury official told Tribal Business News by email that the department has “received Tribal feedback on the guidance through our outreach.”

“This feedback will inform a forthcoming update we will be issuing to address tribal inquiries on the reporting guidance,” the official said. 

“Treasury engaged in extensive consultation with Tribes in March on the State and Local Fiscal Recovery Funds,” the official added. “Five consultation sessions were held with over 1,200 Tribal leaders and stakeholders participating. Eighty-five Tribal leaders provided comments during consultation and Treasury reviewed and considered 150 written comments to produce the Interim Final Rules and Reporting and Compliance Guidance.”

Yet tribes continue to maintain that meaningful consultation has been lacking. In late June and early July, dozens of tribes sent letters and comments to the department insisting on additional tribal consultations before any more money is released by Treasury in August.

For all, there is another looming concern on the horizon because tribes desperately want to receive substantial funding in the infrastructure-based American Jobs Plan that still needs to be voted on in the U.S. Congress. The White House has announced a bipartisan framework, and tribal funding and provisions are expected, but how they will be doled out and what role Treasury may have remains an open question.

No one wants to see the Treasury squander the Marshall Plan-sized goodwill President Biden has brought to Indian Country via ARP, said Porter, the former Seneca Nation President.

“The Biden administration has done a great job initiating consultation with tribal nations throughout the various agencies, including an historic consultation with the State Department reflecting our treaty-based relationship,” he said. “What is missing thus far, however, is evidence that the administration is willing to evolve federal consultation policy to incorporate ‘free, prior, and informed consent’ of tribal governments before the federal agencies take action that affects our peoples.  

“This should not be hard since current federal policy is based on treaties, agreements, and compacts — express evidence that tribal consent is required,” he said. “Failure to incorporate ‘free, prior, and informed consent’ into federal agency actions that affect Native peoples reeks of colonialism and paternalism and should be discarded once and for all."