March 30, 2020
Tribal and Indian Provisions in the CARES Act
On March 27, the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act into law. The Act appropriates roughly $2 trillion to help communities and businesses deal with the impact of the COVID-19 coronavirus.
The Act contains an unprecedented amount of funding, with substantial sums directly set aside for Indian tribes and organizations. Tribes and tribal entities may also be eligible to apply for grants and loans under the Act even where they are not specifically mentioned and/or there is no set-aside for tribes. While the following is not an exhaustive list, some of the more important provisions of the Act include:
Indian Health Services and Health Services in Indian Country and Rural Areas
Many provisions in the Act directly fund health-related activities. The Indian Health Service is constantly posting and updating information related to the coronavirus crisis. If your tribe receives IHS funds or participates in the governance of inter-tribal Indian Health Service funded programs, some or many of these provisions will be of immediate and long-term benefit to your communities. Tribes can also participate in other general provisions in the Act which fund medical service providers in rural areas to increase their flexibility and capacity to deliver services. The Act also contains various generalized provisions, such as changes to Medicare and Medicaid reimbursements, that while not tribal-specific, would also be applicable to tribes.
IHS and HHS websites contain a plethora of information concerning the Act and how those agencies will begin administering this new funding.
In addition to IHS funding, the Act creates other related funding opportunities for programs administered by other federal agencies. A number of these are listed at the end of this document.
TITLE IV - Economic Stabilization and Assistance to Severely Distressed Sectors of the US Economy
For tribes whose casinos and other businesses have been impacted by the crisis, Title IV of the Act deals with what assistance, if any, may be available to them as business owners and as governmental entities.
Section 4003 appropriates $454 billion dollars that “shall be available to make loans and loan guarantees to, and other investments in, programs or facilities established by the Board of Governors of the Federal Reserve System for the purpose of providing liquidity to the financial system that supports lending to eligible businesses, States or municipalities.”
Tribes are specifically included in the definition of “States” for the purposes of this section. Eligibility for these loans could be critical for tribes whose casinos are shut down and need additional funding until they can be reopened. If you have a relationship with lenders, as many casino operators do, it is important that these banks and other financial institutions understand that you are an eligible entity under this provision. While one would assume that most of these funds and the loans that are made will be released through Federal Reserve agents, such as banks, the Act does allow the Federal Reserve to directly make loans. Presumably, these would be the most financially advantageous form of borrowing.
Title IV Loan Provisions.
Title IV authorizes the Secretary to make direct loans to businesses with between 500 and 10,000 employees, including not-for-profit businesses. The Act also authorizes the Secretary to use agents, such as banks and other financial institutions. Since loans can be made to tribes, one would assume that tribal casinos would qualify as a “State” or business or both. But there are other eligibility requirements that loan recipients much meet that could be problematic, such as the requirement to remain neutral in any collective bargaining recruitment efforts or being able to satisfy the types of security interests the Act requires. One of the provisions of this section requires that loan recipients hire 90% of their employees back to work or that they have 90% of their workforce still working. Of course, tribes are not going to borrow money simply to hire workers that should not be near one another and have no clientele to serve. Perhaps the final regulations and guidelines will make these loans more feasible. But if the crisis abates and a tribe needs funding to get things back to normal before opening their doors to patrons, then that could be, and certainly should be, an eligible use of these loans.
Paycheck Protection Provisions
Tribal businesses may be eligible to participate in the loan guarantee provisions contained in Title I of the Act. These are not grants, but instead are 100% guaranteed loans of up to $10 million to be used to cover costs like employee salaries, paid sick leave/medical leave, mortgages/rents, and employee health insurance premiums.
Small Business Administration
Title I also increase the funding administered by the Small Business Administration by $354 billion, funding that tribes that operate small businesses are eligible. What makes a business “small” is not defined quantitatively, but can vary from industry to industry.
TITLE V - $8 Billion set-aside for Coronavirus Relief Fund Payments to Tribal Governments
The Act sets aside $8 billion for one-time aid for tribal governments. Aid to states and local governments is determined by population, but for tribes the allocation method is described in Section 610 (7) as follows:
(7) TRIBAL GOVERNMENTS.—From the amount set aside under subsection (a)(2)(B) for fiscal year 2020, the amount paid under this section for fiscal year 2020 to a Tribal government shall be the amount the Secretary shall determine, in consultation with the Secretary of the Interior and Indian Tribes, that is based on increased expenditures of each such Tribal government (or a tribally-owned entity of such Tribal government) relative to aggregate expenditures in fiscal year 2019 by the Tribal government (or tribally-owned entity) and determined in such manner as the Secretary determines appropriate to ensure that all amounts available under subsection (a)(2)(B) for fiscal year 2020 are distributed to Tribal governments.
A key question raised in this section, and a topic of intense discussion by tribes and their representatives in DC is whether increased expenses incurred by tribally-owned businesses, especially casinos, are covered and, if so, what would constitute an “increased cost”? The literal language of the Act prohibits a tribe from receiving a grant for previously budgeted expenses, even when the source of the revenues that supported the budget has now disappeared, such as during a casino closure. Until the Treasury Secretary lands on these questions and issues guidelines in the coming days, we do not yet know whether tribal casinos and other businesses are covered under the Title VI formula.
We do know, however, that increased governmental expenditures related to the coronavirus-related are covered. This provides tribal governments a potential source of funding to spend more on coronavirus-related activities, such as services to seniors and other vulnerable members, prevention, supplies, food, sanitation and the like. If a tribe has the resources and the ability to provide new or increased coronavirus-related services, they should be eligible to receive funding under this provision.
It is not yet known by us whether these funds will be expended on a first-come, first serve basis, whether they will be lump-sum payments, periodic reimbursements subject to availability of funds, or some other formula. Regardless of how these issues shake out, tribes would be wise to start thinking about and developing budgets for coronavirus-related services that they could be providing to their members and coronavirus-related expenses. When the time comes, it will be critical to get applications in early for the funding, especially if the Title VI funding ends up being administered on a first-come, first-served basis.
DIVISION B – Emergency Appropriations for Coronavirus Health Response and Agency Appropriations
Division B of the Act provides funds to the Department of Health and Human Services as follows:
Provided, That not less than $1,500,000,000 of the amount provided under this heading in this Act shall be for grants to or cooperative agreements with States, localities, territories, tribes, tribal organizations, urban Indian health organizations, or health service providers to tribes, including to carry out surveillance, epidemiology, laboratory capacity, infection control, mitigation, communications, and other preparedness and response activities: Provided further, That every grantee that received a Public Health Emergency Preparedness grant for fiscal year 2019 shall receive not less than 100 percent of that grant level from funds provided in the first proviso under this heading in this Act: Provided further, That of the amount in the first proviso, not less than $125,000,000 shall be allocated to tribes, tribal organizations, urban Indian health organizations, or health service providers to tribes. . .
Thus, eligible Indian entities can apply for funds for a variety of activities that would prevent or mitigate the spread of the virus.
Other Indian, or tribal set-asides include:
Impact on Department of Education Grantees or Contractors
Section 3511 of the Act allows certain educational and governmental entities to request streamlined waivers from certain Department of Education reporting and regulatory requirements. If you are an entity that receives funding from the Department of Education, you need to please review this section and any relevant guidance that the Department of Education publishes. This section also provides significant short-term relief for those members in your community with outstanding education loans. These provisions below will be discussed in a separate document that highlights how the Act benefits individuals, including:
Because most of the federal agencies have not yet published much or any guidance implementing the provisions of the Act, it will be important to continually monitor these agencies notices and websites for any regulatory developments or other guidance.