Chapter v. Salazar

• Decision Date: 09 May 2011
• Docket Number: No. 08–2262.,08–2262.
• Citation: 644 F.3d 1054
• Parties: RAMAH NAVAJO CHAPTER; Oglala Sioux Tribe; Pueblo of Zuni, for themselves and on behalf of a class of persons similarly situated, Plaintiffs–Appellants,v.Kenneth SALAZAR, Secretary of the Interior; Larry Echo Hawk, Assistant Secretary of the Interior; Mary L. Kendall, Acting Chief of Office of Inspector General, U.S. Department of the Interior 1; United States of America, Defendants–Appellees,andThe National Congress of American Indians, Amicus Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

644 F.3d 1054

RAMAH NAVAJO CHAPTER; Oglala Sioux Tribe; Pueblo of Zuni, for themselves and on behalf of a class of persons similarly situated, Plaintiffs–Appellants,

v.Kenneth SALAZAR, Secretary of the Interior; Larry Echo Hawk, Assistant Secretary of the Interior; Mary L. Kendall, Acting Chief of Office of Inspector General, U.S. Department of the Interior 1; United States of America, Defendants–Appellees,andThe National Congress of American Indians, Amicus Curiae.

No. 08–2262.

United States Court of Appeals, Tenth Circuit.

May 9, 2011.

Michael Paul Gross, Esq., M.P. Gross Law Firm, P.C., C. Bryant Rogers, VanAmberg, Rogers, Yepa, Abeita & Gomez, LLP, Santa Fe, NM; and Lloyd Benton Miller, Sonosky, Chambers, Sachse, Miller & Munson, Anchorage, AK, with him on the briefs, for Plaintiffs–Appellants.John Samuel Koppel, Appellate Staff, Civil Division (Tony West, Assistant Attorney General; Gregory J. Fouratt, U.S. Attorney; and Barbara C. Biddle, Appellate Staff, Civil Division, with him on the briefs) U.S. Department of Justice, Washington, DC, for Defendants–Appellees.Geoffrey D. Strommer and Stephen D. Osborne, Hobbs, Straus, Dean & Walker, LLP, Portland, OR, and John Dossett, General Counsel, National Congress of American Indians, Washington, D.C., filed an Amicus Curiae brief for National Congress of American Indians, in support of Plaintiffs–Appellants.Before LUCERO, McKAY, and HARTZ, Circuit Judges.LUCERO, Circuit Judge.

We are faced with an apparent contradiction. Pursuant to the Indian Self–Determination and Education Assistance Act (“ISDA”), the United States enters into self-determination contracts with Indian tribes and tribal organizations “for the planning, conduct and administration of programs or services which are otherwise provided to Indian tribes and their members pursuant to Federal law.” 25 U.S.C. § 450b(j). These agreements include contract support costs (“CSCs”) which are the “reasonable costs for activities that must be carried on by a tribal organization as a contractor to ensure compliance with the terms of the contract and prudent management,” but would not be paid by the Secretary of the Interior if the federal government operated the contracted program directly. § 450j–1(a)(2). Congress has mandated that all self-determination contracts provide full funding of CSCs, see § 450j–1(g), but has nevertheless failed to appropriate funds sufficient to pay all CSCs every year since 1994, instead capping appropriations at a level well below the sum total of CSCs. See, e.g., Dep't of the Interior & Related Agencies Appropriations Act, 1995, Pub.L. No. 103–332, tit. I, 108 Stat. 2499, 2511 (1994).

These funding shortfalls have threatened tribal programs designed to fulfill the congressionally mandated goal of the ISDA to “enhance the progress of Indian people and their communities.” 25 U.S.C. § 450(a)(1). Contracts for programs absolutely essential to self-government, such as law enforcement, economic development, and natural resource management, have become “unworkable” in the words of a tribal representative. As a result, several tribes and tribal organizations brought suit seeking to collect the promised, but unappropriated, CSCs.

The government urges us to affirm the district court and resolve the ISDA/appropriations contradiction by holding that the phrase “subject to the availability of appropriations,” included in both the ISDA, see § 450j–1(b), and all self-determination contracts, see § 450 l (c), unambiguously eliminates the government's obligation to pay CSCs unless Congress appropriates funds to pay all CSCs on every self-determination contract. Plaintiffs counter that the phrase “subject to the availability of appropriations” must be interpreted from the perspective of the individual contractor, not by reference to all contractors who might lay claim to a given appropriation. In other words, only Congressional funding decisions—not discretionary allocation decisions made by an agency—can render an appropriation unavailable.

Following a recent Supreme Court case addressing a nearly identical issue, we conclude that plaintiffs' interpretation is reasonable. As the Court held in Cherokee Nation of Oklahoma v. Leavitt, 543 U.S. 631, 125 S.Ct. 1172, 161 L.Ed.2d 66 (2005), “if the amount of an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose or assumes other obligations that exhaust the funds.” Id. at 641, 125 S.Ct. 1172 (quotation omitted). Following our canon of construction requiring that an act be construed in favor of a reasonable interpretation advanced by a tribe, see Ramah Navajo Chapter v. Lujan, 112 F.3d 1455, 1462 (10th Cir.1997), and the ISDA's requirement that contracts be construed in favor of the contractor, 25 U.S.C. § 450 l (c), we hold that the government remains liable because the annual CSC appropriations were sufficient to cover any individual contract.

Exercising jurisdiction under 28 U.S.C. § 1291, we reverse the district court's grant of summary judgment in favor the government and remand for further proceedings.

I

This appeal comes after nearly two decades of litigation under the ISDA by Ramah Navajo Chapter (“Ramah”). The statutory and administrative landscape provides an important backdrop for our legal analysis.

A

Prior to the ISDA, educational and governmental services were provided directly by the federal government to the hundreds of federally recognized tribes in the United States. Acknowledging that “Federal domination of Indian service programs has served to retard rather than enhance the progress of Indian people,” 25 U.S.C. § 450(a)(1), Congress enacted the ISDA to “permit an orderly transition from the Federal domination of programs for, and services to, Indians to effective and meaningful participation by the Indian people in the planning, conduct, and administration of those programs and services,” § 450a(b). The ISDA reaffirms the “Federal Government's unique and continuing relationship with, and responsibility to, individual Indian tribes and to the Indian people as a whole.” § 450a(a). It pursues a goal of Indian “self-determination by assuring maximum Indian participation in the direction of educational as well as other Federal services to Indian communities so as to render such services more responsive to the needs and desires of those communities.” Id.

Pursuant to the ISDA, the Secretary of the Interior and the Secretary of Health and Human Services are directed to enter into self-determination contracts upon the request of a tribe, provided that the request satisfies several statutory criteria. See §§ 450b(i), 450f(a). The Secretary must provide the amount that the agency “would have otherwise provided for the operation of the programs or portions thereof for the period covered by the contract.” § 450j–1(a)(1). These contracts effectively transfer responsibility for various programs from federal agencies to the tribes themselves, while maintaining federal funding of the programs.

Congress soon recognized that providing only the funds the Secretary would have spent operating a given program created a “serious problem” because those funds do not cover “federally mandated annual single-agency audits, liability insurance, financial management systems, personnel systems, property management and procurement systems and other administrative requirements.” S.Rep. No. 100–274, at 8 (1987), reprinted in 1988 U.S.C.C.A.N. 2620, 2627. As a result, tribal resources “which are needed for community and economic development must instead be diverted to pay for the indirect costs associated with programs that are a federal responsibility.” Id. at 9, reprinted in 1988 U.S.C.C.A.N. at 2628. Congress accordingly amended the ISDA to require full funding of CSCs. See Indian Self Determination Act Amendments of 1987, Pub.L. No. 100–472, § 205, 102 Stat. 2285, 2292–94 (1988).

CSCs include “direct program expenses for the operation of the Federal program that is the subject of the contract,” 25 U.S.C. § 450j–1(a)(3)(A)(i), and “any additional administrative or other expense related to the overhead incurred by the tribal contractor in connection with the operation of the Federal program, function, service, or activity pursuant to the contract,” § 450j–1(a)(3)(A)(ii). The latter category appears to correspond to “indirect costs” which are defined as the “costs incurred for a common or joint purpose benefiting more than one contract objective, or which are not readily assignable to the contract objectives specifically benefited without effort disproportionate to the results achieved.” § 450b(f). Indirect costs are generally calculated by multiplying the “contract funding base” by the “indirect cost rate,” a negotiated figure. See § 450b(b), (g); S.Rep. No. 100–274, at 9, reprinted in 1988 U.S.C.C.A.N. at 2628 (“Tribal indirect cost rates are negotiated and approved according to OMB guidelines by the Department of the Interior Office of Inspector General.”).

Under the revised ISDA, CSC funding “ shall be added to the amount” the Secretary would have spent on the program subject to a self-determination contract. 25 U.S.C. § 450j–1(a)(2) (emphasis added). Another section of the ISDA provides that “[u]pon the approval of a self-determination contract, the Secretary shall add to the contract the full amount of funds to which the contractor is entitled under [§ 450j–1(a) ].” § 450j–1(g) (emphasis added). However, the ISDA twice states that entitlement to self-determination contract funding is “subject to the availability of appropriations.” §§ 450j(c)(1), 450j–1(b). It further provides that “the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under this [Act].” § 450j–1(b).

The phrase “subject to the availability of...