Salazar v. Chapter

• Decision Date: 18 June 2012
• Docket Number: No. 11–551.,11–551.
• Citation: 132 S.Ct. 2181,183 L.Ed.2d 186,567 U.S. 182
• Parties: Ken L. SALAZAR, Secretary of the Interior, et al., Petitioners v. RAMAH NAVAJO CHAPTER et al.
• Court: U.S. Supreme Court

567 U.S. 182

132 S.Ct. 2181

183 L.Ed.2d 186

Ken L. SALAZAR, Secretary of the Interior, et al., Petitioners

v.RAMAH NAVAJO CHAPTER et al.

No. 11–551.

Supreme Court of the United States

Argued April 18, 2012.

Decided June 18, 2012.

Mark R. Freeman, for Petitioners.

Carter G. Phillips, Washington, DC, for Respondents.

Carter G. Phillips, Jonathan F. Cohn, Matthew D. Krueger, Sidley Austin LLP, Washington, DC, C. Bryant Rogers, VanAmberg, Rogers, Yepa, Abeita & Gomez, LLP, Santa Fe, NM, Michael P. Gross, Counsel of Record, M.P. Gross Law Firm, PC, Santa Fe, NM, Lloyd B. Miller, Donald J. Simon, Sonosky, Chambers, Sachse, Endreson & Perry, LLP, Washington, DC, for Respondents.

Daniel H. MacMeekin, Dan MacMeekin, Attorney at Law, Washington, DC, Of Counsel, for Respondents.

Patrice H. Kunesh, Deputy Solicitor–Indian Affairs, Michael J. Berrigan, Associate Solicitor, Jeffrey C. Nelson, Assistant Solicitor, Sabrina A. McCarthy, Attorney Advisor, Office of the Solicitor, U.S. Department of the Interior, Washington, DC, Donald B. Verrilli, Jr., Solicitor General, Counsel of Record, Tony West, Assistant Attorney General, Edwin S. Kneedler, Deputy Solicitor General, Mark R. Freeman, Assistant to the Solicitor General, Barbara C. Biddle, John S. Koppel, Attorneys, Department of Justice, Washington, DC, for Petitioners.

Justice SOTOMAYOR delivered the opinion of the Court.

The Indian Self–Determination and Education Assistance Act (ISDA), 25 U.S.C. § 450 et seq., directs the Secretary of the Interior to enter into contracts with willing tribes, pursuant to which those tribes will provide services such as education and law enforcement that otherwise would have been provided by the Federal Government. ISDA mandates that the Secretary shall pay the full amount of "contract support costs" incurred by tribes in performing their contracts. At issue in this case is whether the Government must pay those costs when Congress appropriates sufficient funds to pay in full any individual contractor's contract support costs, but not enough funds to cover the aggregate amount due every contractor. Consistent with longstanding principles of Government contracting law, we hold that the Government must pay each tribe's contract support costs in full.

I

A

Congress enacted ISDA in 1975 in order to achieve "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." 25 U.S.C. § 450a(a). To that end, the Act directs the Secretary of the Interior, "upon the request of any Indian tribe ... to enter into a self-determination contract ... to plan, conduct, and administer" health, education, economic, and social programs that the Secretary otherwise would have administered. § 450f(a)(1).

As originally enacted, ISDA required the Government to provide contracting tribes with an amount of funds equivalent to those that the Secretary "would have otherwise provided for his direct operation of the programs." § 106(h), 88 Stat. 2211. It soon became apparent that this secretarial amount failed to account for the full costs to tribes of providing services. Because of "concern with Government's past failure adequately to reimburse tribes' indirect administrative costs," Cherokee Nation of Okla. v. Leavitt, 543 U.S. 631, 639, 125 S.Ct. 1172, 161 L.Ed.2d 66 (2005), Congress amended ISDA to require the Secretary to contract to pay the "full amount" of "contract support costs" related to each self-determination contract, § 450j–1(a)(2), (g).¹ The Act also provides, however, that "[n]otwithstanding any other provision in [ISDA], the provision of funds under [ISDA] is subject to the availability of appropriations." § 450j–1(b).

Congress included a model contract in ISDA and directed that each tribal self-determination contract "shall ... contain, or incorporate [it] by reference." § 450l (a)(1). The model contract specifies that " ‘[s]ubject to the availability of appropriations, the Secretary shall make available to the Contractor the total amount specified in the annual funding agreement’ " between the Secretary and the tribe. § 450l (c), (model agreement § 1(b)(4)). That amount " ‘shall not be less than the applicable amount determined pursuant to [ § 450j–1(a) ],’ " which includes contract support costs. Ibid .; § 450j–1(a)(2). The contract indicates that " ‘[e]ach provision of [ISDA] and each provision of this Contract shall be liberally construed for the benefit of the Contractor....’ " § 450l (c), (model agreement § 1(a)(2)). Finally, the Act makes clear that if the Government fails to pay the amount contracted for, then tribal contractors are entitled to pursue "money damages" in accordance with the Contract Disputes Act. § 450m–1(a).

B

During Fiscal Years (FYs) 1994 to 2001, respondent Tribes contracted with the Secretary of the Interior to provide services such as law enforcement, environmental protection, and agricultural assistance. The Tribes fully performed. During each FY, Congress appropriated a total amount to the Bureau of Indian Affairs (BIA) "for the operation of Indian programs." See, e.g., Department of the Interior and Related Agencies Appropriations Act, 2000, 113 Stat. 1501A–148. Of that sum, Congress provided that "not to exceed [a particular amount] shall be available for payments to tribes and tribal organizations for contract support costs" under ISDA. E.g., ibid . Thus, in FY 2000, for example, Congress appropriated $1,670,444,000 to the BIA, of which "not to exceed $120,229,000" was allocated for contract support costs. Ibid.

During each relevant FY, Congress appropriated sufficient funds to pay in full any individual tribal contractor's contract support costs. Congress did not, however, appropriate sufficient funds to cover the contract support costs due all tribal contractors collectively. Between FY 1994 and 2001, appropriations covered only between 77% and 92% of tribes' aggregate contract support costs. The extent of the shortfall was not revealed until each fiscal year was well underway, at which point a tribe's performance of its contractual obligations was largely complete. See 644 F.3d 1054, 1061 (C.A.10 2011). Lacking funds to pay each contractor in full, the Secretary paid tribes' contract support costs on a uniform, pro rata basis. Tribes responded to these shortfalls by reducing ISDA services to tribal members, diverting tribal resources from non-ISDA programs, and forgoing opportunities to contract in furtherance of Congress' self-determination objective. GAO, V. Rezendes, Indian Self–Determination Act: Shortfalls in Indian Contract Support Costs Need to Be Addressed 3–4 (GAO/RCED–99–150, 2009).

Respondent Tribes sued for breach of contract pursuant to the Contract Disputes Act, 41 U.S.C. §§ 601 – 613, alleging that the Government failed to pay the full amount of contract support costs due from FY 1994 through 2001, as required by ISDA and their contracts. The United States District Court for the District of New Mexico granted summary judgment for the Government. A divided panel of the United States Court of Appeals for the Tenth Circuit reversed. The court reasoned that Congress made sufficient appropriations "legally available" to fund any individual tribal contractor's contract support costs, and that the Government's contractual commitment was therefore binding. 644 F.3d, at 1063–1065. In such cases, the Court of Appeals held that the Government is liable to each contractor for the full contract amount. Judge Hartz dissented, contending that Congress intended to set a maximum limit on the Government's liability for contract support costs. We granted certiorari to resolve a split among the Courts of Appeals, 565 U.S. ––––, 132 S.Ct. 995, 181 L.Ed.2d 725 (2012), and now affirm.²

II

A

In evaluating the Government's obligation to pay tribes for contract support costs, we do not write on a clean slate. Only seven years ago, in Cherokee Nation, we also considered the Government's promise to pay contract support costs in ISDA self-determination contracts that made the Government's obligation "subject to the availability of appropriations." 543 U.S., at 634–637, 125 S.Ct. 1172. For each FY at issue, Congress had appropriated to the Indian Health Service (IHS) a lump sum between $1.277 and $1.419 billion, "far more than the [contract support cost] amounts" due under the Tribes' individual contracts. Id., at 637, 125 S.Ct. 1172; see id., at 636, 125 S.Ct. 1172 (Cherokee Nation and Shoshone–Paiute Tribes filed claims seeking $3.4 and $3.5 million, respectively). The Government contended, however, that Congress had appropriated inadequate funds to enable the IHS to pay the Tribes' contract support costs in full, while meeting all of the agency's competing fiscal priorities.

As we explained, that did not excuse the Government's responsibility to pay the Tribes. We stressed that the Government's obligation to pay contract support costs should be treated as an ordinary contract promise, noting that ISDA "uses the word ‘contract’ 426 times to describe the nature of the Government's promise." Id., at 639, 125 S.Ct. 1172. As even the Government conceded, "in the case of ordinary contracts ... ‘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. It followed, therefore, that absent "something special about the promises at issue," the Government was obligated to pay the Tribes' contract support costs in full. Id., at 638, 125 S.Ct. 1172.

We held that the mere fact that ISDA self-determination contracts are made "subject to the availability of appropriations" did not warrant a special rule. Id., at 643, 125 S.Ct. 1172 (internal quotation marks omitted). That commonplace provision, we explained, is...