Modoc Lassen Indian Hous. Auth. v. U.S. Dep't of Hous. & Urban Dev.

Citation864 F.3d 1212
Decision Date25 July 2017
Docket Number No. 15-1060,Nos. 14-1313,14-1338,No. 14-1484,14-1331,14-1343,14-1407,14-1340,s. 14-1313,14-1484
Parties MODOC LASSEN INDIAN HOUSING AUTHORITY, the tribally designated housing entity for the Grindstone Indian Rancheria of Wintun-Wailaki Indians of California, Plaintiff–Appellee, v. UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ; Ben Carson, Secretary of Housing and Urban Development; Deborah A. Hernandez, General Deputy Assistant Secretary for Public and Indian Housing; Glenda Green, Director, Office of Grants Management, Office of Native American Programs, Defendants–Appellants. Tlingit-Haida Regional Housing Authority, Plaintiff–Appellee, v. United States Department of Housing and Urban Development ; Ben Carson, Secretary of Housing and Urban Development; Deborah A. Hernandez, General Deputy Assistant Secretary for Public and Indian Housing; Glenda Green, Director, Office of Grants Management, Office of Native American Programs, Defendants–Appellants. Choctaw Nation of Oklahoma; Housing Authority of the Choctaw Nation of Oklahoma, Plaintiffs–Appellees/Cross–Appellants, v. United States Department of Housing and Urban Development ; Ben Carson, Secretary of Housing and Urban Development; Deborah A. Hernandez, General Deputy Assistant Secretary for Public and Indian Housing; Glenda Green, Director, Office of Grants Management, Office of Native American Programs, Defendants–Appellants/Cross–Appellees. Navajo Housing Authority, Plaintiff–Appellee, v. United States Department of Housing and Urban Development ; Ben Carson, Secretary of Housing and Urban Development; Deborah A. Hernandez, General Deputy Assistant Secretary for Public and Indian Housing, Glenda Green, Director, Office of Grants Management, Office of Native American Programs, Defendants–Appellants. Fort Peck Housing Authority, Plaintiff–Appellee, v. United States Department of Housing and Urban Development ; Ben Carson, Secretary of Housing and Urban Development; Jemine A. Bryon, Acting Assistant Secretary for Public and Indian Housing, Defendants–Appellants. Sicangu Wicoti Awanyakapi Corporation; Oglala Sioux (Lakota) Housing; Turtle Mountain Housing Authority; Winnebago Housing and Development Commission ; Lower Brule Housing Authority ; Spirit Lake Housing Corporation ; Trenton Indian Housing Authority, Plaintiffs–Appellees, v. United States Department of Housing and Urban Development ; Ben Carson, Secretary of Housing and Urban Development; Deborah A. Hernandez, General Deputy Assistant Secretary for Public and Indian Housing; Glenda Green, Director, Office of Grants Management, Office of Native American Programs, Defendants–Appellants. Blackfeet Housing; The Zuni Tribe; Isleta Pueblo Housing Authority ; Pueblo of Acoma Housing Authority; Association of Village Council PresidentS Regional Housing Authority; Northwest Inupiat Housing Authority ; Bristol Bay Housing Authority; Aleutian Housing Authority; Chippewa Cree Housing Authority ; Big Pine Paiute Tribe, Plaintiffs–Appellees, v. United States Department of Housing and Urban Development ; Ben Carson, Secretary of Housing and Urban Development; Deborah A. Hernandez, Assistant Secretary for Public and Indian Housing; Glenda Green, HUD's Office of Grants Management, National Office of Native American Programs, Department of Housing and Urban Development, Office of Public and Indian Housing, Defendants–Appellants.
CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)

Gerard Sinzdak, Attorney, Appellate Staff, United States Department of Justice, Civil Division, Washington, D.C. (Benjamin C. Mizer, Principal Deputy Assistant Attorney General, John F. Walsh, United States Attorney, and Michael S. Raab, Attorney, Appellate Staff, United States Department of Justice, Civil Division, Washington, D.C., with him on the briefs), for Defendants-Appellants.

Craig H. Kaufman, Quarles & Brady, LLP, Tucson, Arizona, Jonathan K. Tillinghast, Simpson, Tillinghast, Sorensen & Sheehan, Juneau, Alaska, and John Fredericks, III, Fredericks Peebles & Morgan LLP, Mandan, North Dakota (David J. Rapport, Rapport and Marston Law Offices, Ukiah, California; Louis W. Bullock and Patricia Whittaker Bullock, Bullock Law Firm, Tulsa, Oklahoma; J. Frank Wolf, III, Rabon Wolf & Rabon, Hugo, Oklahoma; David V. Heisterkamp, II, Amber Leigh Hunter, and James F. Wagenlander, Wagenlander & Heisterkamp, Denver, Colorado; Blain David Myhre, Blain Myhre LLC, Englewood, Colorado; Peter J. Breuer, Fredericks Peebles & Morgan LLP, Louisville, Colorado, with them on the brief), for Plaintiffs-Appellees.

Before MATHESON, BACHARACH, and MORITZ, Circuit Judges.

MORITZ, Circuit Judge.

These consolidated appeals arise from a government agency's decision to recapture, via administrative offset, funds that the agency allegedly overpaid to multiple grant recipients. The grant recipients brought suit in federal court, arguing in relevant part that the agency lacked authority to recapture the funds without first providing them with administrative hearings. The district court agreed and ordered the agency to repay the grant recipients. The agency now appeals that order.1

If these underlying facts sound relatively straightforward, it's because they are. But they nevertheless give rise to three legal questions that are decidedly less so: (1) did the agency recapture the funds pursuant to a statute or regulation that imposed a hearing requirement, thus rendering the recaptures illegal; (2) if the agency didn't recapture the funds pursuant to such a statute or regulation, did it have authority to recapture the alleged overpayments at all; and (3) if not, must the agency reimburse the grant recipients for the amounts it illegally collected?

In answering the first of these three questions, the panel unanimously agrees that the agency didn't recapture the funds pursuant to a statute or regulation that imposes a hearing requirement. Thus, we agree that the district court erred in ruling that the recipients were entitled to hearings before the agency could recapture the alleged overpayments.

But that's where our unanimous agreement ends; the remaining questions divide the panel. Ultimately, two members of the panel agree that the agency lacked authority to recapture the funds via administrative offset. Accordingly, we affirm the portion of the district court's order that characterizes the recaptures as illegal. Nevertheless, two other members of the panel agree that if the agency no longer has the recaptured funds in its possession, then the district court lacked authority to order the agency to repay the recipients. Thus, we reverse that portion of the district court's order and remand for further factual findings.

I

Congress enacted the Native American Housing Assistance and Self–Determination Act (NAHASDA) of 1996, 25 U.S.C. §§ 4101 - 4243, to help Indian tribes provide affordable housing for their members, see 25 U.S.C. § 4101(5). To that end, the United States Department of Housing and Urban Development (HUD) allocates NAHASDA grant funds among recipient tribes each year.

In determining how to allocate those funds, HUD employs a regulatory formula that takes into account each tribe's Formula Current Assisted Stock (FCAS)—a figure calculated by multiplying the number of eligible low-rent housing units in that tribe's possession by a fixed dollar amount. See 25 U.S.C. § 4152(a)(1) ; 24 C.F.R. §§ 1000.310(a), 1000.316. Critically, HUD relies on each tribe to provide an accurate yearly count of its eligible housing units. See 24 C.F.R. §§ 1000.315(a), 1000.319(a). And because HUD allocates funds to all tribes from a finite yearly pool, see 25 U.S.C. § 4151, a tribe that erroneously reports an inflated number of eligible housing units will not only receive an overpayment, but will necessarily reduce the funds available to other eligible tribes. See Fort Belknap Hous. Dep't v. Office of Pub. & Indian Hous. , 726 F.3d 1099, 1100 n.2 (9th Cir. 2013) ("Because the total amount of money available to all tribes is fixed, [NAHASDA funding] is a zero-sum game: Any change in one tribe's allocation requires an offsetting change to other tribes' allocations.").

Appellees are various tribes (the Tribes) that allegedly inflated their eligible-unit counts—and therefore allegedly received overpayments—during various years.2 When HUD discovered these alleged overpayments, it recouped the funds by deducting them from the Tribes' subsequent yearly NAHASDA allocations. The Tribes then sued for the return of those funds.

In relevant part, the Tribes argued that HUD lacked authority to recapture the funds without first providing the Tribes with administrative hearings. The district court agreed. As a result, the court ordered HUD to restore the recaptured funds to the Tribes. HUD now appeals.

II

Because these appeals arise under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701 - 706, "[w]e take ‘an independent review of [HUD's] action’ and are not bound by the district court's factual findings or legal conclusions." Utah Envtl. Cong. v. Bosworth , 439 F.3d 1184, 1188 (10th Cir. 2006) (quoting Olenhouse v. Commodity Credit Corp. , 42 F.3d 1560, 1569 n.16 (10th Cir. 1994) ). We will "set aside agency action if it is ‘arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.’ " Id. (quoting 5 U.S.C. § 706(2)(A) ).

On appeal, HUD advances three challenges to the district court's ruling that HUD acted illegally by recapturing the funds without conducting administrative hearings. First, HUD asserts that it wasn't required to hold hearings before it recaptured the funds because the only statutes and regulations that might require hearings don't apply here. Second, HUD insists that in the absence of an applicable statute or regulation, it was instead empowered to recapture the alleged overpayments via administrative offset under the common-law doctrine of payment by mistake. Third, HUD states that even if it lacked common-law authority to recapture the alleged overpayments via...

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