Cherokee Nation v. Thompson

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
NOV 26 2002
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

CHEROKEE NATION OF OKLAHOMA;
SHOSHONE-PAIUTE TRIBES OF THE
DUCK VALLEY RESERVATION,

Plaintiffs - Appellants,
v.
TOMMY G. THOMPSON, Secretary of No. 01-7106
Health and Human Services; MICHAEL
H. TRUJILLO, Director of the Indian
Health Service, United States Department
of Health and Human Services,

Defendants - Appellees.

ALAMO-NAVAJO SCHOOL BOARD;
BRISTOL BAY AREA HEALTH
CORPORATION; LAC COURTES
ORIELLES BAND OF LAKE SUPERIOR
CHIPPEWA INDIANS; RAMAH
NAVAJO CHAPTER; OGLALA SIOUX
TRIBE; RAMAH NAVAJO SCHOOL
BOARD, INC.,

Amici Curiae.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
(D.C. NO. 99-CV-92-S)
Lloyd Benton Miller (William R. Perry, Melanie B. Osborne with him on the
briefs), Sonosky, Chambers, Sachse, Miller & Munson, Anchorage, Alaska, for
Plaintiffs - Appellants.

Jeffrica Jenkins Lee, Attorney, Civil Division, United States Department of
Justice, Washington, D.C. (Robert D. McCallum, Jr., Assistant Attorney General,
Washington, D.C.; Sheldon J. Sperling, United States Attorney, Muskogee,
Oklahoma; and Barbara C. Biddle, Attorney, Civil Division, United States
Department of Justice, Washington, D.C., with her on the briefs), for Defendants -
Appellees.

Marsha Kostura Schmidt, Hobbs, Straus, Dean & Walker, LLP, Washington, D.C.,
filed an amici brief on behalf of Alamo-Navajo School Board, Bristol Bay Area
Health Corporation, and LAC Courtes Orielles Band of Lake Superior Chippewa
Indians.

Michael P. Gross, M.P. Gross & Associates, P.C., Santa Fe, New Mexico, and
C. Bryant Rogers, Roth, VanAmberg, Rogers, Ortiz, Fairbanks & Yepa, LLP,
Santa Fe, New Mexico, filed an amici brief on behalf of Ramah Navajo Chapter,
Oglala Sioux Tribe, and Ramah Navajo School Board, Inc.

Before MURPHY , ANDERSON , and BALDOCK , Circuit Judges.

ANDERSON , Circuit Judge.

This case involves the adequacy of funding provided by the United States

to plaintiffs, two Native American Tribes, for their performance of contracts

operated under the Indian Self-Determination and Education Assistance Act. The

Tribes appeal the grant of summary judgment to the United States. We affirm.

-2-
 BACKGROUND

Under the Indian Self-Determination and Education Assistance Act

(“ISDA”), 25 U.S.C. §§ 450-450(n), as amended, the Secretary of Health and

Human Services (“Secretary”) may enter into contracts or compacts with Indian

tribes (self-determination contracts) to permit the tribes to administer various

programs that the Secretary would otherwise administer. The Act further

stipulates that the Secretary will provide funding for the administration of those

programs. The basic idea behind the ISDA is to promote tribal autonomy and

self-determination by permitting tribes to operate programs previously operated

by the federal government, but to ensure that they do not suffer a reduction in

funding for those programs simply because they assume direct operation of them.

The Indian Health Service (“IHS”) provides primary health care for Indians

and Alaska natives throughout the United States. In fiscal year 1994, in

accordance with the ISDA, plaintiffs, the Shoshone-Paiute and the Cherokee

Nation Tribes of the Duck Valley Reservation, entered into Compacts of Self-

Governance and associated Annual Funding Agreements with the Secretary to

operate certain IHS programs for their members.

-3-
 Under § 450j-1(a) of the ISDA, the Secretary is obligated to provide

funding for those self-determination contracts or compacts 1
in an amount equal to

what he would have provided were IHS to continue to provide health care services

itself directly. This is called the “Secretarial amount.” 25 U.S.C. § 450j-1(a)(1).

See Ramah Navajo Sch. Bd., Inc. v. Babbitt , 87 F.3d 1338, 1341 (D.C. Cir. 1996)

(describing the Secretarial amount as the “amount of funding that would have

been appropriated for the federal government to operate the programs if they had

not been turned over to the Tribe”).

In addition to the Secretarial amount, the ISDA directs the Secretary to

provide contract support costs (“CSC”) to cover the direct and indirect expenses

associated with operating the programs. The ISDA does not precisely define what

CSC are. 2
We have observed that “[r]eviewing . . .the [ISDA] as a whole, . . .

1
There is no material distinction for purposes of this appeal between an
agreement called a “compact” and an agreement called a “contract.” Accordingly,
as the parties have done, we use the terms interchangeably.
2
The ISDA provides some general guidance as to what CSC are: “the
reasonable costs for activities which must be carried on by a tribal organization as
a contractor . . . but which—

(A) normally are not carried on by the respective Secretary in his
direct operation of the program; or
(B) are provided by the Secretary in support of the contracted
program from resources other than those under contract.

25 U.S.C. § 450j-1(a)(2). It also provides for the payment of CSC for “direct
program expenses for the operation of the Federal program that is the subject of
(continued...)

-4-
‘contract support costs’ encompasses ‘indirect costs’ incurred by a tribal

organization in carrying out a self-determination contract.” Ramah Navajo

Chapter v. Lujan , 112 F.3d 1455, 1461 (10th Cir. 1997). “Indirect costs” are, in

turn, defined as those “incurred for a common or joint purpose benefiting more

than one contract objective . . . ,” 25 U.S.C. § 450b(f), as contrasted with “direct

program costs,” which are those “that can be identified specifically with a

particular contract objective,” 25 U.S.C. § 450b(c). See Shoshone-Bannock

Tribes v. Secretary , 279 F.3d 660, 663 n.5 (9th Cir. 2002); Ramah Navajo

Chapter , 112 F.3d at 1457-58. As this case demonstrates, the adequacy of the

funding provided for tribal indirect costs has proven to be a recurring and

troublesome issue. See Ramah Navajo Chapter , 112 F.3d at 1462 (“The

legislative history indicates one of the primary concerns of Congress in enacting

the [1988] amendments [to the ISDA] was the chronic underfunding of tribal

indirect costs.”) (citing S. Rep. No. 100-274 at 8-13 (1987)). See United States

General Accounting Office, Indian Self-Determination Act: Shortfalls in Indian

Contract Support Costs Need to Be Addressed at p.3 (June 1999) (noting that

while “Tribes’ allowable contract support costs have tripled from 1989 through

(...continued)
2

the contract,” as well as “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.” 25
U.S.C. § 450j-1(a)(3)(A)(i), (ii).

-5-
1998—increasing from about $125 million to about $375 million. . . . Congress

has not funded contract support to keep pace with these increases, resulting in

funding shortfalls”).

The ISDA provides a further and, in this case, significant caveat to the

funding obligations: “Notwithstanding any other provision in this subchapter, the

provision of funds under this subchapter is subject to the availability of

appropriations and 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 subchapter.” 25 U.S.C. § 450j-1(b); see also 25

U.S.C. § 450j(c) (“The amounts of [self-determination] contracts shall be subject

to the availability of appropriations.”). The first clause in § 450j-1(b) is called

the “availability clause” and the second the “reduction clause.”

Additionally, every self-determination contract entered into under the ISDA

must either contain or incorporate by reference the provisions of a model

agreement prescribed by the ISDA. 25 U.S.C. § 450 l(a). The model agreement

reiterates the availability clause, specifically providing that the amount funded by

the Secretary is “[s]ubject to the availability of appropriations . . . .” 25 U.S.C.

§ 450 l(c) (describing § 1(b)(4) of model agreement). Accordingly, the compact

with the Shoshone-Paiute Tribe contained the following clause:

Funding Amount. Subject only to the appropriation of funds by the
Congress of the United States and to adjustments pursuant to [25

-6-
 U.S.C. § 450j-1] of the Indian Self-Determination and Education
Assistance Act, as amended, the Secretary shall provide the total
amounts specified in the Annual Funding Agreement.

Appellants’ App. at 302. The compact with the Cherokee Nation contained

virtually identical language. See id. at 425.

Additionally, the Annual Funding Agreement between the Shoshone-Paiutes

and the Secretary included the following provision:

Section 9 – Adjustments.

(a) Due to Congressional Actions. The parties to this Agreement
recognize that the total amount of the funding in this Agreement is
subject to adjustment due to Congressional action in appropriations
Acts or other laws affecting availability of funds to the Indian Health
Service and the Department of Health and Human Services. Upon
enactment of any such Act or law, the amount of funding provided to
the Tribes in this Agreement shall be adjusted as necessary, after the
Tribes have been notified of such pending action and subject to any
rights which the Tribes may have under this Agreement, the
Compact, or the law.

Appellants’ App. at 342. The Annual Funding Agreement between the Cherokee

Nation and the Secretary stated as follows:

The parties agree that adjustments may be appropriate due to
unanticipated Congressional action. Upon enactment of relevant
Appropriations Acts, the adjustments may be negotiated as necessary;
provided, however, the Nation shall be notified and consulted in
advance of any proposed adjustments. It is recognized by the parties
that circumstances may arise where funding variances or other
changes or modifications may be needed, and the parties shall
negotiate same in good faith. Provided, however, this AFA shall not
be modified to decrease or delay any funding except pursuant to
mutual agreement of the parties.

-7-
Appellants’ App. at 450.

Recognizing that there could be numerous tribes competing for funding, the

ISDA gave the IHS some flexibility in determining how to allocate funds:

“[p]ayments of any grants or under any contracts pursuant to section 450f and

450h of this title may be made in advance or by way of reimbursement and in

such installments and on such conditions as the appropriate Secretary deems

necessary to carry out the purposes of this part.” 25 U.S.C. § 450j(b). This case

concerns a dispute about the allocation of CSC funds to the plaintiff Tribes for

fiscal years 1996 and 1997.

In allocating CSCs for those years, IHS categorized contracts with tribes

into two broad groups—“existing” contracts and “new or expanded” contracts. 3

Existing contracts were those that a tribe had been operating in a prior year or

years. IHS allocated CSCs to existing contracts generally in accordance with the

recommendations contained in appropriation committee reports. New or

expanded contracts were those involving programs which tribes had never

operated before. With respect to these new or expanded contracts, IHS took the

ISD Fund Congress had appropriated for the “transitional costs of initial or

3
IHS’ methodology in awarding CSC funds was explained in an internal
agency guideline call the Indian Self-Determination Memorandum 92-2. This
memorandum was superseded in 1996 by IHS Circular No. 96-04, which contains
essentially the same methodology.

-8-
expanded tribal contracts” and established a priority list based on the date the

tribe requested funding for a new or expanded contract. Each year IHS would

fully pay for CSCs for new or expanded contracts at the top of the priority list,

and continue down the list until the ISD Fund was fully depleted. Contracts that

had been so funded were removed from the list, and those below it advanced. In

practice, the funds for new or expanded contracts were depleted before every tribe

on the priority list received its CSC funding for new or expanded programs.

At the end of each year, the IHS would summarize the full CSC needs of

each contracting tribe, in the prior year, calculate how much the IHS paid toward

those CSC needs, and determine the resulting shortfall, if any. The Director of

the Division of Financial Management for the IHS stated that in 1997 there was a

CSC funding shortfall of $81,996,000 and in 1996 a CSC funding shortfall of

$43,000,000. Fitzpatrick Decl. at ¶ 8, Appellants’ App. at 530.

As indicated, this case concerns a dispute about the amount of CSCs

provided to the plaintiff Tribes in fiscal years 1996 and 1997. 4
For fiscal year

1996, the House Committee on Appropriations recommended that approximately

$1.7 billion be appropriated to IHS, with $153 million to be spent on CSCs for

existing self-determination contracts, and $7.5 million on such costs for new or

Plaintiffs aver that the Shoshone-Paiute tribe was underfunded in 1996 and
4

1997, and that the Cherokee Nation tribe was underfunded in 1997.

-9-
expanded self-determination contracts. See H.R. Rep. No. 104-173, at 97 (1995).

As actually enacted, the Appropriations Act for 1996 appropriated the

recommended $1.7 billion, of which approximately $1.374 billion was

unrestricted. Of that $1.374 billion, however, $7.5 million “shall remain

available until expended, for the Indian Self-Determination Fund, which shall be

available for the transitional costs of initial or expanded tribal contracts, grants or

cooperative agreements with the Indian Health Service under the provisions of the

Indian Self-Determination Act.” Omnibus Consolidated Rescissions and

Appropriations Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321-189 (1996).

For fiscal year 1997, Congress similarly appropriated a lump sum of

approximately $1.8 billion to IHS for administration of the ISDA, of which

$160,000,000 had been earmarked by the appropriations committee report for

CSCs for existing contracts. See S. Rep. No. 104-319, at 90 (1996). As with the

1996 appropriation, in the actual Appropriations Act, Congress appropriated the

recommended $1.8 billion, with $1.426 billion unrestricted, and, as in 1996, it

allocated $7.5 million to the ISD Fund for new or expanded contracts under the

ISDA. Omnibus Consolidated Appropriations Act, 1997, Pub. L. No. 104-208,

110 Stat. 3009-212, 3009-213 (1996). Thus, neither Act on its face restricted or

limited the amount of funds, out of the lump-sum appropriation, available for

-10-
CSCs for ongoing programs. Both designated $7.5 million to “remain available

until expended” in the ISD Fund to pay for CSCs for new or expanded contracts.

In fiscal years 1996 and 1997, the requests for CSCs for new and expanded

contracts exceeded the $7.5 million allocated. As a result, full CSC funding for

such new and expanded contracts was delayed and/or not paid at all for some

tribes, including the plaintiffs. Additionally, plaintiffs allege that CSC funding

for their ongoing contracts was inadequate. The Cherokee Nation claims that, in

total, it was not paid $3.4 million in CSC for fiscal year 1997. See First Amended

Comp. at ¶¶ 31, 32; Appellants’ App. at 44. The Shoshone-Paiute Tribe claims it

was not paid $3.5 million in CSC for fiscal years 1996 and 1997. See id. at ¶¶ 14,

15; Appellants’ App. at 39-40; Fitzpatrick Decl. at 18, Appellants’ App. at 534-

35. Both Tribes assert that, because of these budget shortfalls, they were

compelled to make substantial cuts in their programs.

On October 21, 1998, Congress passed the Omnibus Consolidated and

Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, § 314,

112 Stat. 2681-288 (1998), which imposed a mandatory cap on the total amount of

CSC funding for new and expanded programs. Section 314 states in part:

Notwithstanding any other provision of law, amounts appropriated to
or earmarked in committee reports for the Bureau of Indian Affairs
and the Indian Health Service by Public Law 103-138, 103-332,
104-134, 104-208 and 105-83 for payments to tribes and tribal
organizations for contract support costs associated with self-
determination or self-governance contracts, grants, compacts, or

-11-
 annual funding agreements with the Bureau of Indian Affairs or the
Indian Health Service as funded by such Acts, are the total amounts
available for fiscal years 1994 through 1998 for such purposes . . . .

The public laws referenced in § 314 included the 1996 and 1997 Appropriations

Acts which, as indicated, had appropriated $7.5 million for CSCs for new and

expanded programs. Additionally, the committee reports which preceded those

laws had earmarked certain amounts for CSCs for ongoing programs. In 1998

Congress also enacted a one-year moratorium barring the Secretary from entering

into further ISDA contracts. See id. , § 328; see also Citizen Potawatomi Nation

v. Norton , 248 F.3d 993, 1001 (10th Cir.), modified on rehearing , 257 F.3d 1158

(2001).

Alleging that the Secretary failed to fully pay all of their CSCs associated

with both the ongoing portions of their compacts with the IHS and the initial and

expanded portions of their compacts, the plaintiff Tribes brought administrative

claims against the Secretary under the Contract Disputes Act, 41 U.S.C. §§ 601-

13. When that failed to resolve the dispute, the Tribes filed this action in March

1999, seeking damages and declaratory relief against the United States, the

Secretary, and the Director of the IHS. All parties filed motions for summary

judgment, and, on June 25, 2001, the district court denied the Tribes’ motions,

granted the United States’ motion for summary judgment and dismissed the case.

-12-
 Concluding that the language of the ISDA was clear and unambiguous, the

district court reasoned as follows:

This court finds the contracts at issue are conditioned on the IHS
having sufficient funding. This court does not agree with the
interpretation espoused by plaintiffs that the language in the Self-
Determination Contracts which states that contract support costs are
“subject to availability of appropriations” limits only the Secretary’s
ministerial duty to disburse funds but not her ultimate liability for
full contract support costs. . . . To adopt plaintiffs’ interpretation
would render the phrase “availability of appropriations” meaningless.

Cherokee Nation v. United States , 190 F. Supp. 2d 1248, 1259 (E.D. Okla. 2001).

The court further found that:

the money appropriated to IHS for fiscal years 1996 and 1997 was
already committed to pay for funding of recurring costs and other
mandatory obligations. Thus, there were simply insufficient
appropriations to pay the contract support costs requested by
plaintiffs. Further, the IHS could not use any of its annual
appropriations to pay plaintiffs’ contract supports costs without
impairing its ability to discharge its responsibilities with respect to
other tribes and individual Indians.

Id. at 1260. The court also held that § 314 limited the funds available for CSCs

for new or expanded programs:

Section 314 imposes a $7.5 million cap on IHS’ payments each year
to tribes for contract support costs for their new and expanded
programs from 1994 through 1998. This amount had already been
disbursed for the years in question. Section 314 bars further
payments for those years since no appropriations were available.

-13-
Id. at 1262. Finally, the court rejected plaintiffs’ argument that, regardless of the

level of appropriations, the government was nonetheless liable to them under

contract principles for their full CSCs.

Plaintiff Tribes appeal, arguing: (1) sufficient appropriations were legally

available such that the Secretary was able to and should have paid plaintiffs’ full

CSCs for fiscal years 1996 and 1997 and neither the availability-of-appropriations

clause nor the reduction clause contained in 25 U.S.C. § 450j-1(b) provide a

defense to that obligation; (2) section 314 does not excuse the failure to pay

because it would amount to a retroactive extinguishment of vested contractual and

statutory rights, thereby, at a minimum, exposing the government to liability in

damages; and (3) plaintiffs’ contracts under the ISDA obligated the IHS to secure

adequate appropriations to satisfy its contractual obligations.

We review the grant of summary judgment de novo , applying the same

standard as did the district court. Ramah Navajo Chapter , 112 F.3d at 1460.

Summary judgment is appropriately granted where “there is no genuine issue as to

any material fact and . . . the moving party is entitled to judgment as a matter of

law.” Fed. R. Civ. P. 56(c). “We examine the factual record and reasonable

inferences therefrom in the light most favorable to the nonmoving party.” Ramah

Navajo Chapter , 112 F.3d at 1460.

-14-
 DISCUSSION

“The starting point in any case involving statutory construction is the

language of the statute itself.” Id. The government argues that § 450j-1(b)

clearly and unambiguously states that the IHS’ obligation to provide full funding

for ongoing and/or new and expanded CSC for plaintiffs’ programs in fiscal years

1996 and 1997 is subject to the availability of appropriations by Congress, and,

since there were insufficient appropriations to fully pay those costs, IHS incurs no

liability for its failure to so pay. It further argues that three circuit courts have so

held, and we should align ourselves with those courts.

We begin, therefore, with the relevant language of the ISDA:

“Notwithstanding any other provision in this subchapter, the provision of funds

under this subchapter is subject to the availability of appropriations and the

Secretary is not required to reduce funding for programs, projects, or activities

serving a tribe to make funds available to another tribe . . . .” 45 U.S.C.

§ 450j-1(b). As the statute plainly states, the “provision of funds” is “ subject to

the availability of appropriations.” Id. (emphasis added). This is so

“[n]otwithstanding any other provision ” of the Act. Id. (emphasis added).

This language is “clear and unambiguous.” Babbitt v. Oglala Sioux Tribal

Pub. Safety Dep’t , 194 F.3d 1374, 1378 (Fed. Cir. 1999). By means of this

express language, “Congress has plainly excluded the possibility of construing the

-15-
contract support costs provision as an entitlement that exists independently of

whether Congress appropriates money to cover it.” Shoshone-Bannock Tribes ,

279 F.3d at 665. We agree with those courts, as well as the District of Columbia

Circuit, which also found the statutory language clear and compelling:

[W]e read the subject-to-availability-of-funds provision to mean
precisely what it says: the Secretary need only distribute the amount
of money appropriated by Congress under the Act, and need not take
money intended to serve non-CSF purposes under the ISDA in order
to meet his responsibility to allocate CSF.

Ramah Navajo Sch. Bd. , 87 F.3d at 1345. To hold otherwise would “render the

subject-to-appropriations language of § 450j-1(b) meaningless.” Oglala Sioux

Tribal Pub. Safety Dep’t , 194 F.3d at 1378.

Plaintiffs respond that appropriations were , in fact, “legally available” to

fully pay their CSCs. Thus, they argue that the availability clause does not excuse

the government’s failure to fully pay their CSCs for their ongoing

programs/contracts or their new or expanded ones. Because the arguments are

slightly different with respect to CSC funding for ongoing contracts, as contrasted

with new or expanded ones, we address each set of contracts in turn.

I. Ongoing Contract CSCs

Plaintiffs make a series of arguments about why, notwithstanding the

availability clause, they were entitled to full funding of CSCs for ongoing

-16-
programs. First, they argue that the appropriations for ongoing CSCs at issue

here were legally available because they were part of a lump-sum unrestricted

appropriation for IHS, and the fact that the appropriations committee reports

recommended that CSCs for ongoing contracts be limited to $153 million in 1976

and $160 million in 1997 is irrelevant in the face of the silence of the

Appropriation Acts on the issue. They also argue that CSC payments cannot

“take a back-seat to IHS’s discretionary decisions about how best to spend its

lump-sum appropriations” without violating both the spirit of the ISDA as a

whole and the legislative history of the 1988 amendments to the ISDA.

Appellants’ Op. Br. at 28. Those amendments include § 450j-1(b), which itself

reflected “a studied congressional intent to deny the Secretary all discretion over

contract funding decisions.” Id. Finally, they argue the district court erred in

relying on the recommendations of the appropriations committees as providing an

“earmark” capping the amount available for ongoing CSCs.

Based on the materials before it at the summary judgment stage, the district

court found that “[m]ost of IHS’ annual appropriations are distributed to area

offices for the payment of recurring costs . . . [which are costs that] occur

automatically from year to year and must be funded without reduction.” Cherokee

Nation , 190 F. Supp. 2d at 1250 (citing the Declaration of Carl Fitzpatrick, the

Director of the Division of Financial Management for the IHS). Thus, “[i]n fiscal

-17-
year 1997, IHS allocated to the Area Offices approximately $1,368,893,059 of the

total approximately $1.8 billion annual appropriation on a recurring basis . . . .”

Fitzpatrick Decl. at ¶ 10, Appellants’ App. at 530-31. For fiscal year 1996, the

IHS allocated approximately $1,313,990,083 on a recurring basis. Id. ,

Appellants’ App. at 531.

Further, in accordance with the appropriation committee report

recommendations, the IHS allocated to area offices for tribal contract CSCs

$153,040,000 in 1996 and $160,660,000 in 1997. Id. at ¶ 17, Appellants’ App. at

534. Fitzpatrick further declared that “reprogramming additional funds for

contract support costs would have required IHS to use money otherwise dedicated

to other purposes supporting health services delivery to tribes.” Id. at ¶ 17,

Appellant’s App. at 534. Finally, Fitzpatrick stated that all of the money

appropriated for fiscal years 1996 and 1997 was in fact spent, leaving a zero

balance at the end of the year. 5

5
Plaintiffs dispute the validity of the assertion that no moneys were left
over from the appropriations for IHS in 1996 and 1997. In support of their
allegation that there was not a zero balance, however, the Tribes refer us to a
document in their appendix titled “Procedures for Allocating Prior Year
Unobligated Balances to Satisfy CSC Shortfalls.” Appellants’ App. at 489.
Plaintiffs assert it is dated November 1998, although no date appears on the
document. Moreover, it is labeled “DRAFT For Discussion Purposes Only” and,
in any event, does not support plaintiffs’ assertion that there were, in fact,
balances remaining from fiscal years 1996 and 1997. Thus, this document fails to
rebut the Fitzpatrick Declaration’s statement that there was a zero balance.

-18-
 While plaintiffs argue that the district court’s conclusions on these points

are unsupported or somehow erroneous, they do not directly challenge the validity

or accuracy of the Fitzpatrick Declaration, nor explain why the district court was

not entitled to rely on it in ruling on the motions for summary judgment. The

Fitzpatrick Declaration demonstrated that providing to the plaintiff Tribes their

entire CSCs for ongoing contracts would have necessitated a reduction in funding

for other tribal programs, or a reprogramming of such funds. 6

Plaintiffs argue that the government is simply making an “after-the-fact”

justification for its failure to fully pay CSCs, once it decided to spend all the

money appropriated to it on other items. They argue that their contractual and

statutory entitlement to such full funding vested immediately, at the beginning of

each fiscal year, and, presumably, ahead of other IHS obligations. But, as the

government points out, plaintiffs provide no support for that assertion, nor would

that make sense, given the structure of the compacts plaintiffs have with the

government, as well as the IHS’ numerous other mandatory financial obligations. 7

6
Plaintiffs assert that the government’s “‘reduction clause’ defense is
nothing but a post hoc rationalization for actions that patently violated the Tribes’
rights.” Appellants’ Op. Br. at 38 n.61. However, as the government points out,
the record demonstrates that the IHS made its budgetary allocations for all funds,
including CSCs, at the beginning of the year. See Fitzpatrick Decl. ¶ 4 & Ex. F.,
Appellants’ App. at 528, 540-43.

Both the ISDA, which authorizes the contracts at issue, and the contracts
7

themselves, explicitly make the availability of the sums owed to the Tribes
(continued...)

-19-
 Moreover, while the Tribes correctly argue that the earmark

recommendations of a committee are not typically legally binding, 8
the IHS is

likewise not obligated to completely ignore them. Nothing suggests that the IHS

awarded the amount it did for ongoing program CSCs because it felt legally

obligated to do so because of the committee report recommendations, as opposed

to making that allocation as an exercise of the limited discretion inevitably vested

in it. See Ramah Navajo Chap. , 112 F.3d at 1463 (noting that 1988 amendments

retain for government some discretion in awarding CSCs); Ramah Navajo Sch.

Bd., Inc. , 87 F.3d at 1346 n.11 (noting the very limited discretion the Secretary

has to award insufficient CSC funds under the ISDA). 9
In sum, we agree with the

7
(...continued)
subject to the availability of appropriations. Thus, it is implicit that, whenever
the contracts stated the CSC funds were due, only those funds were due which had
sufficient appropriations “backing” them. Further, plaintiffs fail to explain why
their claims for CSC funds should take priority over all other tribal claims for
funds from IHS.
8
As we discuss infra, § 314 retroactively gave those committee earmarks
binding authority.
9
Plaintiffs argue that the 1988 amendments to the ISDA reflect a desire to
severely limit the Secretary’s discretion in allocating CSC funds. We agree. As
the D.C. Circuit observed, “Congress left the Secretary with as little discretion as
feasible in the allocation of CS[C].” Ramah Navajo Sch. Bd., 87 F.3d at 1344.
However, as the discussion in Ramah Navajo Sch. Bd. indicates, we must bear in
mind the context in which CSCs are allocated. Where there are sufficient
appropriations to fully fund all CSCs, “the Act informs the Secretary exactly how
the full funding should be allocated.” Id. at 1348. In the face of an insufficient
appropriation, the Secretary must “follow as closely as possible the allocation
(continued...)

-20-
district court that funding for the Tribes’ ongoing CSCs was subject to the

availability of appropriations from Congress, and there were insufficient

appropriations to fully pay those CSCs.

II. New or Expanded Contracts

As all parties agree, the 1996 and 1997 Appropriations Acts specifically

addressed funding for new or expanded tribal contracts: “$7,500,000 shall remain

available until expended [for the ISD Fund] . . . for the transitional costs of initial

or expanded tribal contracts.” 110 Stat. 1321-189, 110 Stat. 3009-212, 213. As

all parties also agree, tribes requested far more than the $7.5 million available for

new or expanded contracts, and, pursuant to its queue or priority list system, the

IHS awarded CSC funds to tribes ahead of plaintiffs on the priority list.

Plaintiffs argue that the “shall remain available” language placed no cap or

limit on the amount of CSC funds which could be awarded to tribes for new or

expanded programs, so IHS’ failure to award more than the $7.5 million violated

both the ISDA and plaintiffs’ compacts with the government. We disagree.

9
(...continued)
plan Congress designed in anticipation of full funding.” Id. Thus, where
appropriations are insufficient, the Secretary has a very limited discretion to
allocate those funds in a manner consistent with the ISDA.

-21-
 The Ninth Circuit in Shoshone-Bannock Tribes considered this very issue.

It concluded as follows:

The appropriation language is arguably ambiguous. The language,
$7.5 million “shall remain available until expended” is not an
unambiguous cap, as was the “of which not to exceed” language of
the [1995] appropriation. By themselves, the words might mean that
$7.5 million is available, without necessarily implying that other
money is unavailable. Alternatively, they could mean that, of the
total appropriation, only $7.5 million is available for the contract
support costs. The House Appropriations Committee provided
explanatory language in its report on the appropriation. The
Committee Report speaks to a concern it had “to contain the cost
escalation in contract support costs,” and says “[t]he Committee has
provided $7,500,000 for the Indian Self-Determination Fund . . . to
be used for new and expanded contracts.” This Committee Report
language lends itself to the second reading, that only $7.5 million is
available, not the first. The most natural reading is that the
Committee gave attention to how much of the total appropriation
should go to contract support costs for new and expanded contracts
and decided that $7.5 million was all they wanted to spend.

Shoshone-Bannock Tribes , 279 F.3d at 666 (footnote omitted).

The Ninth Circuit found further support for its conclusion in § 314, by

which, the court opined, “Congress eliminated the ambiguity retroactively.” Id.

Thus, the court concluded:

The “availability” language in the fiscal year 1996 appropriation
either plainly limits the funds available for contract support to the
$7.5 million appropriated for that purpose or, if we were to take the
interpretation most favorable to the Tribes, is at best ambiguous,
leaving room for an argument that the remaining $1.7 billion is also
“available.” But the ambiguity, if there is any, is cleared away, both
by the Appropriations Committee report explaining the $7.5 million
appropriation when it was made and, with no possible ambiguity, by
the 1999 “that’s all there is” language in § 314.

-22-
Id. at 667.

Plaintiffs respond that the term “shall remain available” has a particular

meaning in appropriations law: “the language in the ISD provision is about when

a stated sum of money may be spent after the current fiscal year on CSCs for

‘initial or expanded’ contracts, not how much may be spent in the current year for

that purpose.” Appellants’ Op. Br. at 35. But the two decisions of the

Comptroller General plaintiffs cite in support of that interpretation do not, in our

view, support it. 10
We agree with the Ninth Circuit that a better reading of the

10
In Matter of Forest Service–Appropriations for Fighting Forest Fires, B-
231,711, 1989 WL 240615 at *2 (Comp. Gen. 1989), the Comptroller General
observed that “the language ‘of which $263,323,000 for . . . firefighting . . . shall
remain available’ . . . does not represent a line-item limitation or a cap on the
amount of money available for obligation for firefighting. Rather, this language
expresses the availability of a specific amount as to time—two years instead of
one.” (emphasis added) (footnote omitted). In Matter of: The Honorable Thad
Cochran, B-271,607, 1996 WL 290140 at *1 (Comp. Gen. 1996), the Comptroller
General stated that “[w]hen the Congress expressly provides that an appropriation
‘shall remain available until expended,’ it constitutes a no-year appropriation and
all statutory limits on when the funds may be obligated and expended are
removed.” (emphasis added). Both of those decisions clearly discuss the temporal
limitation the phrase “shall remain available” places on expenditures, but they do
not clearly support plaintiffs’ argument that the amount of funds specified is
subject to unlimited expansion.
Furthermore, our view is supported by the Office of General Counsel of the
United States General Accounting Office: “The ‘shall be available’ family of
earmarking language presumptively ‘fences in’ the earmarked sum (both
maximum and minimum), but is more subject to variation based upon underlying
congressional intent.” 2 United States General Accounting Office, Principles of
Federal Appropriations Law, at 6-8 (2d ed. 1992). There is no evidence of an
underlying Congressional intent rebutting the presumption that the “shall be
(continued...)

-23-
language is that Congress intended to limit the amount available for new or

expanded CSCs to $7.5 million.

III. Section 314

As indicated, in October 1998, Congress passed an Emergency

Supplemental Appropriations Act, which included § 314. That section stated in

part that “amounts appropriated to or earmarked in committee reports for . . . the

[IHS] by Public Laws . . . 104-134 [and] 104-208 . . . for payments to tribes and

tribal organizations for contract support costs associated with self-determination

or self-governance contracts, . . . compacts, or annual funding agreements

with . . . the [IHS] as funded by such Acts, are the total amounts available for

fiscal years 1994 through 1998 for such purposes . . . .” Pub. L. No. 105-277,

§ 314, 112 Stat. 2681-288 (1988). Public Laws 104-134 and 104-208 were,

respectively, the Appropriations Acts for fiscal years 1996 and 1997.

The government argues we need not consider § 314 as a retroactive law;

rather, it simply clarifies what Congress meant in enacting the 1996 and 1997

10
(...continued)
available” language fenced in the earmarked amount of $7.5 million. Indeed, to
the extent there is any indicia of Congressional intent, either in the appropriations
committee report or in the later-enacted § 314, it supports the conclusion that
Congress intended the $7.5 million to be a maximum.

-24-
Appropriations Acts. The Tribes argue that, if we construe § 314 retroactively, it

amounts to a breach of statutory and contractual vested rights.

“[I]t is beyond dispute that, within constitutional limits, Congress has the

power to enact laws with retrospective effect.” INS v. St. Cyr , 533 U.S. 289, 316

(2001). There must, however, be “a clear indication from Congress that it

intended such a result.” Id. ; see also Daniels v. United States , 254 F.3d 1180,

1187 (10th Cir. 2001) (“Congress . . . has the power to . . . direct [a] statute’s

retroactive application, but it must do so explicitly.”).

Whether we view this as a retroactive law, or as merely a clarification of

the prior Appropriations Acts, Congress could not have been clearer as to its

intent that the Act have a retroactive effect. It specifically references prior laws

enacted in prior years, both by number and by date, and specifically states that

“the amounts appropriated to or earmarked in committee reports . . . are the total

amounts available.” Thus, Congress indisputably indicated no more funds would

be available to pay CSCs for those years, and it made it very clear that that is

what it intended to appropriate for those years. We therefore agree with the

district court that § 314 supports its conclusion that Congress intended to make

available for CSCs for new or expanded contracts in fiscal years 1996 and 1997

only $7.5 million. Further, it indicated that the earmarked amounts in the

committee reports for ongoing CSCs were intended to be legally binding. And, as

-25-
we explain infra , because any contract claim was conditioned on, and subject to,

available appropriations, we reject plaintiffs’ argument that § 314 breached

plaintiffs’ contractual and /or statutory rights.

IV. Contract Claims

Finally, the Tribes argue that, under the doctrine of New York Airways,

Inc. v. United States , 369 F.2d 743 (Ct. Cl. 1966), “an ISDA contract binds the

United States to pay even where the agency fails to seek sufficient appropriations

from Congress.” Appellants’ Op. Br. at 2. In New York Airways , the plaintiff

helicopter company sued the government for money allegedly not paid for mail

delivery. The company was entitled by statute to receive compensation for its

services, but the amounts earmarked in the appropriations act were exhausted

before the end of the fiscal year. The Court of Claims held the government was

obligated to pay the helicopter service: “the mere failure of Congress to

appropriate funds, without further words modifying or repealing, expressly or by

clear implication, the substantive law, does not in and of itself defeat a

Governmental obligation created by statute.” New York Airways , 369 F.2d at 748

(citing United States v. Vulte , 233 U.S. 509 (1914)). By contrast, however, where

a “contract expressly provided that the quantities of work ordered shall be kept

‘within the limits of available funds,’” and where the relevant statute “prohibited

-26-
obligating the Government to pay a larger sum . . . than covered by a specific

appropriation” then work “performed in excess of the appropriation was held not

to create an obligation against the Government enforceable in the courts.” Id.

This case is like the latter situation, in that the government’s contractual

and statutory obligation to pay CSCs was expressly subject to the availability of

appropriations. The doctrine of New York Airways does not therefore support the

Tribes’ assertion that the government is liable under contract principles despite

any shortfall in appropriations. See Oglala Sioux , 194 F.3d at 1379 (rejecting the

identical argument based on New York Airways , stating “Oglala’s situation

differs fundamentally in that the ability of Interior to bind the Government

contractually was expressly conditioned on the availability of appropriations.”). 11

CONCLUSION

We have carefully considered all of the Tribes’ arguments. For the

foregoing reasons, we AFFIRM the judgment of the district court.

The Tribes also argue that, under United States v. Winstar Corp., 518 U.S.
11

839 (1996), the government may not “repudiate its own debts . . . simply in order
to save money” and that “when it attempts to do so it is no more than a party
breaching a contract.” Appellants’ Op. Br. at 46. Thus, they suggest that,
whether or not appropriations were available, the government remained
contractually bound. We disagree. It was always clear and explicit, both in the
ISDA and in the contracts with the government, that the funding was subject to
available appropriations and, despite the Tribes’ repeated assertions to the
contrary, there were, in fact, insufficient appropriations to permit full funding.

-27-
 F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
APR 20 2005
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT

CHEROKEE NATION OF
OKLAHOMA; SHOSHONE-PAIUTE
TRIBES OF THE DUCK VALLEY
RESERVATION,

Plaintiffs - Appellants,
v. No. 01-7106
MICHAEL O. LEAVITT, * Secretary
of Health and Human Services;
CHARLES W. GRIM, ** Director of
the Indian Health Service, United
States Department of Health and
Human Services,

Defendants - Appellees.

ORDER

On January 26, 2005, Michael O. Leavitt became the Secretary of Health
*

and Human Services. In accordance with Rule 43(c)(2) of the Federal Rules of
Appellate Procedure, Mr. Leavitt is substituted for Tommy Thompson as the
Defendant-Appellee in this action.
**
On August 6, 2003, Charles W. Grim became the Director of the Indian
Health Service, United States Department of Health and Human Services. In
accordance with Rule 43(c)(2) of the Federal Rules of Appellate Procedure,
Mr. Grim is substituted for Michael H. Trujillo as the Defendant-Appellee in this
action.
 APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF OKLAHOMA
(D.C. NO. 99-CV-092-S)

Before MURPHY , ANDERSON , and BALDOCK , Circuit Judges.

This matter is before us upon remand from the United States Supreme

Court. The Court reversed our decision, Cherokee Nation v. Thompson , 311 F.3d

1054 (10th Cir. 2002), rev’d , 125 S. Ct. 1172 (2005), which affirmed the lower

court’s decision, Cherokee Nation v. United States , 190 F. Supp. 2d 1248 (E.D.

Okla. 2001), aff’d , 311 F.3d 1054 (2002), rev’d , 125 S. Ct. 1172 (2005), and

remanded the case to us for further proceedings consistent with its opinion.

We hereby recall the mandate and vacate our earlier judgment. The

Supreme Court’s decision requires that the judgment of the United States District

Court for the Eastern District of Oklahoma be reversed. The cause is remanded to

the United States District Court for the Eastern District of Oklahoma for further

proceedings in accordance with the opinion of the United States Supreme Court.

It is so ordered. The mandate shall issue forthwith.

Entered for the Court
PATRICK FISHER, Clerk of Court

By:
Deputy Clerk

-2-