CASE NO IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

Transcription

1 Case: Document: Date Filed: 05/05/2008 Page: 1 CASE NO IN THE UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT ) SOUTHERN UTE INDIAN TRIBE, ) ) Plaintiff-Appellant ) ) v. ) ) MICHAEL O. LEAVITT, Secretary ) of the United States Department of ) Health and Human Services, et al., ) ) Defendants-Appellees ) On Appeal from the United States District Court for the District of New Mexico The Honorable Judge William P. Johnson D.C. No. 1:05-cv WJ-LAM APPELLANT S OPENING BRIEF Respectfully Submitted, STEVEN BOOS MONTE MILLS Attorney for the Southern Ute Indian Legal Department, Southern Ute Tribe Indian Tribe P.O. Box 2717 P.O. Box 737 Durango, CO Ignacio, CO Telephone: (970) Telephone: (970) x 2140 Facsimile: (970) Facsimile: (970) sboos@mbssllp.com Oral Argument is requested. SCANNED PDF FORMAT ATTACHMENTS ARE INCLUDED WITH DIGITAL SUBMISSION SENT VIA .

2 Case: Document: Date Filed: 05/05/2008 Page: 2 TABLE OF CONTENTS Prior or Related Appeal... 1 Statement of Jurisdiction... 1 Statement of the Issues... 1 Introduction... 2 Statement of the Facts...2 A. Statutory Background... 2 B. Factual Background... 5 Statement of the Case... 7 Standard of Review... 9 Summary of the Argument Argument I. THE IHS S INTERPRETATION OF THE ISDA IS NOT ENTITLED TO DEFERENCE, IS CONTRARY TO THE ISDA, AND FRUSTRATES THE INTENT AND PURPOSE OF THAT ACT A. The IHS s Interpretation of the ISDA is Not Entitled to Deference B. The IHS s Position, as Adopted by the District Court, Misinterprets the ISDA and Requires the Tribe to Accept Contract Terms that Violate the ISDA The IHS s CSC language contradicts the ISDA s funding provisions The alternative CSC language is improper because the language does not comply with the ISDA s i

3 Case: Document: Date Filed: 05/05/2008 Page: 3 requirements for contract formation a. The alternative CSC language added to the AFA is not consistent with the ISDA s model agreement b. The additional language would unilaterally modify the contract terms C. The IHS s Interpretation Frustrates the Intent and Purpose of the ISDA II. THE EFFECTIVE DATE OF THE CONTRACT SHOULD BE THE DATE THAT THE CONTRACT WOULD HAVE BEGUN IF NOT FOR THE IHS S ILLEGAL DECLINATION A. To Require the Contract Effective Date to be the Date the Tribe Begins Operation of the Clinic Undermines the Intent and Policy of the ISDA B. The IHS Overstates the Potential for Damages and Cites Distinguishable Authority in Support Thereof III. THE DISTRICT COURT EXCEEDED ITS AUTHORITY BY DICTATING THE TERMS OF THE AFA Conclusion ii

4 Case: Document: Date Filed: 05/05/2008 Page: 4 Cases TABLE OF AUTHORITIES Adams Fruit Co., Inc. v. Barrett, 494 U.S. 639 (1990) Anderson v. Dir., Office of Workers Compensation Programs, 455 F.3d 1102 (10th Cir. 2006) Babbitt v. Oglala Sioux Tribal Pub. Safety Dept., 194 F.3d 1374 (Fed. Cir. 1999)... 14,21 Central Coast Const. v. Lincoln-Way Corp., 404 F.2d 1039 (10th Cir. 1968) Cherokee Nation of Oklahoma v. Leavitt, 543 U.S. 631 (2005)...2,3,4,15,19,20 Cherokee Nation of Oklahoma v. Thompson, 311 F.3d 1054 (10th Cir. 2002)... 3,4,19,20,23 Cheyenne River Sioux Tribe v. Kempthorne, 496 F. Supp. 2d 1059 (D.S.D. 2007) Crownpoint Institute of Tech. v. Norton, Civ. No JP/DJS (D.N.M. Sept. 19, 2005) Davis v. Mineta, 302 F.3d 1104 (10th Cir. 2002)... 9 Equal Employment Opportunity Comm n v. Wiltel, Inc., 81 F.3d 1509 (10th Cir. 1996)... 9 In re Woodcock, 45 F.3d 363 (10th Cir. 1995) Manning v. Astrue, 510 F.3d 1246 (10th Cir. 2007)... 13,14 Miller v. French, 530 U.S. 327 (2000) Murphy Exploration and Prod. Co. v. Dep t of Interior, 252 F.3d 473 (D.C. Cir. 2001) N.L.R.B. v. Pueblo of San Juan, 276 F.3d 1186 (10th Cir. 2002) iii

5 Case: Document: Date Filed: 05/05/2008 Page: 5 Pasqua Yaqui Tribe of Arizona, Docket No. A (HHS Appeals Bd. Jan. 12, 1999) Prater v. Ohio Education Ass n, 505 F.3d 437 (6th Cir. 2007) Ramah Navajo Chapter v. Lujan, 112 F.3d 1455 (10th Cir. 1997)...3,12,14,21,25 Ramah Navajo School Board, Inc. v. Babbitt, 87 F.3d 1338 (D.C. Cir. 1996)... 3,11,12 Thompson v. Cherokee Nation of Oklahoma, 334 F.3d 1075 (Fed. Cir. 2003)... 4 Samish Indian Nation v. United States, 419 F.3d 1355 (Fed. Cir. 2005) Shoshone-Bannock Tribes of Fort Hall Reservation v. Leavitt, 408 F. Supp. 2d 1073 (D. Or. 2005)... 3 Statutes 25 U.S.C U.S.C. 450a U.S.C. 450f(a)... 2,5 25 U.S.C. 450f(a)(2) U.S.C. 450f(a)(2)(A)-(E) U.S.C. 450f(a)(2)(D) U.S.C. 450f(b)(3) U.S.C. 450j-l(a) U.S.C. 450j-l(a)(1) U.S.C. 450j-l(a)(2)... 3,6,13 25 U.S.C. 450j-l(a)(3)... 3,6 25 U.S.C. 450j-l(b)... 3,12,14,15 25 U.S.C. 450j-l(g)... 12,13,16,26 iv

6 Case: Document: Date Filed: 05/05/2008 Page: 6 25 U.S.C. 450k(a)(1) U.S.C. 450l(a)... 4,16,18 25 U.S.C. 450l(a)(2) U.S.C. 450l(c)...4,12,14,16,17,26 Model Agreement 1(a)(2) Model Agreement 1(b)(4)... 4,12,14,15,16 Model Agreement 1(b)(6)(B) Model Agreement 1(b)(14)... 4 Model Agreement 1(c)... 4 Model Agreement 1(c)(2)... 4,26 Model Agreement 1(f)(2)... 4 Model Agreement 1(f)(2)(A)(i) Model Agreement 1(f)(2)(B) U.S.C. 450m-l(a)... 1,7,25,27 25 U.S.C. 450m-l(b) U.S.C. 1292(a)(1)... 1 Legislative Materials Pub. L , 108 Stat (1994) Pub. L , 121 Stat (2007) S.Rep. No , 103d Cong.2d Sess. 14 (1994) v

7 Case: Document: Date Filed: 05/05/2008 Page: 7 Federal Regulations 25 C.F.R (b)(7) C.F.R ,25 Federal Rules Fed. R. App. P. 4(a)(1)... 1 Other Materials Internal Agency Procedures Handbook for Non-Construction Contracting Under Title I of the Indian Self-Determination and Education Assistance Act 5-12 (1999)... 4,16,18,26 vi

8 Case: Document: Date Filed: 05/05/2008 Page: 8 None. PRIOR OR RELATED APPEAL STATEMENT OF JURISDICTION The United States District Court for the District of New Mexico had jurisdiction over this matter pursuant to 25 U.S.C. 450f(b)(3) and 450m-1(a), sections of the Indian Self-Determination and Education Assistance Act ( ISDA or Act ), 25 U.S.C. 450, et seq. The notice of appeal was timely filed on November 16, 2007, in accordance with Fed. R. App. P. 4(a)(1). Aplt. App. at 456. After briefing the issue, the Tenth Circuit Court of Appeals withheld ruling on whether it has jurisdiction over this appeal pursuant to 28 U.S.C. 1292(a)(1). STATEMENT OF THE ISSUES 1. Whether the District Court erred by accepting the Defendants /Appellees interpretation of the ISDA and by requiring contract terms that violate the ISDA s funding requirements Whether the District Court incorrectly established the contract effective date as the date on which the Tribe begins actual operation of the Clinic. 2 1 The Tribe raised this issue in its briefs and in oral argument. Aplt. App. at , , 424, , , 450. The District Court discussed and decided the issue in its Second Order. Aplt. App This issue, however, has been argued throughout this case. In its first form, the issue was whether the IHS could decline the Tribe s contract because of the Tribe s refusal to include contract language that did not conform to the ISDA s model agreement. The District Court decided this issue in its First Order. The issue arose again and was essentially relitigated by the parties before the Second Order. 2 The Tribe raised this issue in its briefs and in oral argument. Aplt. App. at , , , 425, The District Court discussed and decided the issue in its Second Order. Aplt. App. at ,

9 Case: Document: Date Filed: 05/05/2008 Page: 9 INTRODUCTION The Southern Ute Indian Tribe ( Tribe ) appeals the District Court s Order of October 18, 2007 ( Second Order ) concerning the Tribe s ISDA proposal to contract with the Indian Health Service ( IHS ) to operate and manage the Southern Ute Health Clinic ( Clinic ). The District Court initially found that the Defendants /Appellees (collectively referred to hereinafter as IHS ) declination of the Tribe s contract proposal violated the ISDA and reversed the declination (see June 15, 2007 Order ( First Order ) Aplt. App. at 296). The Second Order then erroneously mandated inclusion of a contract provision in a collateral document not before the District Court the Annual Funding Agreement ( AFA ) using language that violated the ISDA. The Second Order also dictated a contract effective date inconsistent with the First Order and the ISDA. The Second Order then specifically directed the parties to negotiate a contract with terms that violate the ISDA, and, which, according to the First Order, the Tribe had a right to reject. STATEMENT OF THE FACTS A. Statutory Background The federal government must contract with tribes for tribal operation and management of functions and services provided to Indians by the federal government, such as medical clinics on reservations, through self-determination contracts between the tribe and the agency responsible for providing such services. 25 U.S.C. 450f(a); Cherokee Nation of Oklahoma v. Leavitt, 543 U.S. 631, 634 (2005) (Cherokee III). When a tribe contracts to administer such services, the federal government must pay the 2

10 Case: Document: Date Filed: 05/05/2008 Page: 10 tribe the same amount that would have otherwise been expended by the federal agency for those services. 25 U.S.C. 450j-1(a)(1); Cherokee Nation of Oklahoma v. Thompson, 311 F.3d 1054, 1056 (10th Cir. 2002) (Cherokee I), overruled on other grounds by Cherokee III, 543 U.S This funding amount is called the Secretarial amount. In addition to the Secretarial amount, the ISDA [also] directs the Secretary to provide contract support costs (CSC) to cover the direct and indirect expenses associated with operating the programs. Cherokee I, 311 F.3d at The ISDA explicitly requires inclusion of CSC. Section 450j-1(a)(2) provides: There shall be added to [the Secretarial amount] contract support costs. The Act also specifies the level of CSC required: CSC shall consist of an amount for the reasonable costs for activities which must be carried on by a tribal organization as a contractor to ensure compliance with the terms of the contract and prudent management U.S.C. 450j-1(a)(2); see also 450j-1(a)(3) (further defining the requisite level of CSC funding). Payment of CSC ensures that tribes do not suffer a reduction in funding for those programs simply because they assume direct operation of them, Cherokee I, 311 F.3d at The Act also explicitly states that the provision of funds is subject to the availability of appropriations. 25 U.S.C. 450j-1(b). 3 A survey of the relevant case law reveals that the IHS has repeatedly attempted to wrongfully limit its obligations to pay CSC. See, e.g., Cherokee III, 543 U.S. 631; and Shoshone-Bannock Tribes of Fort Hall Reservation v. Leavitt, 408 F. Supp. 2d 1073 (D. Or. 2005). The Bureau of Indian Affairs has engaged in similar conduct. See, e.g., Ramah Navajo School Board, Inc. v. Babbitt, 87 F.3d 1338 (D.C. Cir. 1996), and Ramah Navajo Chapter v. Lujan, 112 F.3d 1455 (10th Cir. 1997). 3

11 Case: Document: Date Filed: 05/05/2008 Page: 11 Self-determination contracts are standardized. The ISDA requires that every selfdetermination contract incorporate the terms of a model agreement, which is provided [in the Act], or such other terms as are agreed to by both parties. Thompson v. Cherokee Nation of Oklahoma, 334 F.3d 1075, 1082 (Fed. Cir. 2003) (Cherokee II), aff d, Cherokee III, 543 U.S. 631; 25 U.S.C. 450l(a). The model agreement reiterates that funding is subject to the availability of appropriations, 25 U.S.C. 450l(c) (model agreement 1(b)(4)); Cherokee I, 311 F.3d at 1057; and references the AFA, 25 U.S.C. 450l(c) (model agreement 1(b)(14), 1(c), 1(f)(2)). The AFA is subject to annual negotiation after execution of the self-determination contract. It is incorporated into the contract and specifies the exact amount of funding to which a tribe is entitled in a particular year. 25 U.S.C. 450l(c) (model agreement 1(c)(2), 1(f)(2)). Depending upon the availability of appropriations, a tribe may or may not receive the full amount of funding specified in the AFA. Id. at (model agreement 1(b)(4)). According to the IHS s own policy, the AFA shall set out the information required by 1.(f)(2) of the Model Agreement and any other provisions to which the parties agree. DOI/HHS Internal Agency Procedures Workgroup, Department of Interior and Department of Health and Human Services, Internal Agency Procedures Handbook for Non-Construction Contracting under Title I of the Indian Self- Determination and Education Assistance Act 5-12 (1999) [hereinafter IAPH]. 4 This 4 Available at ageone.htm. 4

12 Case: Document: Date Filed: 05/05/2008 Page: 12 policy does not authorize the IHS to unilaterally add AFA provisions that contradict the ISDA or the model agreement, or which are not agreed to by both parties. B. Factual Background The Southern Ute Health Clinic is an IHS facility providing primary health care for the Tribe s members and other local Indians on the Southern Ute Indian Reservation. On January 25, 2005, the Tribe submitted a proposed self-determination contract pursuant to 25 U.S.C. 450f(a) of the ISDA for the management and operation of the Clinic. Aplt. App. at 23-24, Under the Act, the IHS had 90 days to review and accept or decline the contract proposal in whole or in part. 25 U.S.C. 450f(a)(2). During the IHS s initial 90-day review period, the Tribe received only two communications from IHS. Aplt. App. at 24, 92-95, 104; see also 25 U.S.C. 450f(a)(2). The first requested that the Tribe clarify its contract proposal, which the Tribe promptly did. Aplt. App. at 24, The second asked the Tribe to voluntarily extend the 90-day review period, which the Tribe also did. Aplt. App. at 25-26, 104, , 119, 120, 121, 122, 123. Four months after the contract proposal was submitted, the Tribe and the IHS met for the first time to discuss the proposal. Aplt. App. at 26, Although the IHS had a duty to review and identify declination issues within the first 90-day period, during the initial discussion it became clear that the IHS had still not yet reviewed the proposal. Id. After that meeting, the IHS stated that no declination issues existed, but requested one additional extension anyway. The Tribe granted the request based on the IHS s representation that no declination issues existed. Aplt. App. at 26-27,

13 Case: Document: Date Filed: 05/05/2008 Page: 13 After a second meeting, the IHS informed the Tribe of a new internal IHS policy, issued immediately following publication of the Cherokee III decision, pursuant to which the IHS would now require that all new self-determination contracts include a statement that the IHS would not pay, or promise to pay, any CSC for the duration of the contract. Aplt. App. at 28, The new CSC-waiver policy, stated in a memorandum from the IHS Director, appeared to be an effort to insulate the IHS from Cherokee-type damage claims. The IHS then informed the Tribe of its intent to decline the Tribe s contract proposal in its entirety if the Tribe refused to include this additional language in its selfdetermination contract. Aplt. App. at 29, 138. The Tribe responded that declining the contract proposal for refusing to include the new CSC-waiver language would violate the ISDA s command to award a verbatim mandatory contract. Aplt. App. at 29-30, ; see also 25 U.S.C. 450j-1(a)(2)-(3) (establishing a statutory duty to provide CSC). In July 2005, the Tribe submitted a final revised contract proposal stating a contract effective date of October 1, 2005 and budget proposals, including specific CSC amounts, premised on that effective date. Aplt. App. at 10, 30, At the parties final negotiation meeting, the IHS acknowledged that the only outstanding issue was the Tribe s refusal to add the new CSC-waiver language to its contract. Aplt. App. at 31, The Tribe stated that it would waive neither its statutory right to the model agreement terms, nor its right to CSC funding subject only to the availability of appropriations, and thus would not agree to include the IHS's proposed CSC-waiver language. Aplt. App. 31, 116, On August 15, 2005, the IHS declined the Tribe s 6

14 Case: Document: Date Filed: 05/05/2008 Page: 14 entire self-determination contract proposal, citing as grounds the Tribe s rejection of the IHS s CSC-waiver language. Aplt. App. at 32, This lawsuit followed. STATEMENT OF THE CASE On September 15, 2005, the Tribe filed a complaint in the United States District Court for the District of New Mexico seeking, inter alia, immediate injunctive relief pursuant to 25 U.S.C. 450m-1(a) to reverse the IHS's declination of the Tribe s selfdetermination contract proposal. Aplt. App. at 1, 2, 15. The IHS subsequently moved for summary judgment. Aplt. App. at 201, 244. The District Court suggested consolidation of the motion for preliminary injunction with the merits of the case and the parties agreed. Aplt. App. at 282, 283, 290, 296. The District Court accordingly treated the parties motions as cross-motions for summary judgment. Aplt. App. at 305. On June 15, 2007, the District Court issued its First Order, finding that the IHS wrongfully declined the Tribe s contract. Aplt. App. at The District Court concluded that the IHS could not decline a contract based upon the Tribe s refusal to include the IHS s new CSC-waiver language because it was not one of the five declination criteria allowed by the ISDA. Id.; see also 25 U.S.C. 450f(a)(2)(A)-(E). The District Court held that the IHS did not have discretion to condition approval of the Tribe s self-determination contract on inclusion of contract language that differed from the language of the ISDA model agreement, nor did the IHS have the discretion to condition approval on the Tribe s waiver of its statutory right to the inclusion of CSC funding specifically provided by the ISDA. Aplt. App. at 314. The District Court issued summary judgment and injunctive relief in the Tribe s favor reversing the declination and 7

15 Case: Document: Date Filed: 05/05/2008 Page: 15 directed the Tribe to prepare a form of order for injunctive relief, submit it to the IHS for approval, then submit it to the District Court. Id. In preparing the form of order, the parties reached an impasse over two issues: the contract language relating to CSC and the contract effective date. Contrary to the First Order and the rights established by 25 C.F.R , the IHS continued to insist that the contract include language limiting the Tribe s right to CSC. Aplt. App. at With regard to the contract effective date, instead of agreeing that the District Court s reversal of the declination had the effect of approving the original proposal by operation of law, including the Tribe s proposed effective date (i.e. October 1, 2005), the IHS insisted that the effective date should be the date on which the Tribe would actually begin operation of the Clinic. Aplt. App. at Unable to reach agreement on the form of the order, the Tribe filed a Motion to Set Presentment Hearing and the IHS filed a Motion for Clarification. Aplt. App. at 316, 374. On October 18, 2007, after a hearing on the matter, Aplt. App. at , the District Court issued its Second Order, favoring the IHS and essentially reversing important elements of the First Order. Aplt. App. at 389, 398. The District Court directed that the Tribe include the following CSC language in the AFA: [IHS] currently owe[s] the Tribe $0 in CSC (on the basis that the Tribe has not incurred any costs, and because no funds are available to be dispersed [sic]); that the CSC amount reflecting [the Tribe s] required CSC will be calculated; but in view of the congressional earmark for CSC, the amount will be placed on the shortfall list for payment if and when funding becomes available. 8

16 Case: Document: Date Filed: 05/05/2008 Page: 16 Aplt. App. at 394, 399. Furthermore, the District Court concluded that the appropriate contract effective date would be the date on which the Tribe begins operating the Clinic. Aplt. App. at 394, 398. The Second Order then directed the parties to: (1) meet and resume negotiations for entering into a self-determination contract which includes a start date of the date the Tribe undertakes operation of the... Clinic, (2) include Defendants version of the annual funding agreement language, which entitled the Tribe to $0 for CSC, and (3) within six weeks of the filing of the Order, complete negotiations and submit a form of order for injunctive relief to the Court. Aplt. App. at By dictating the two terms on which the parties had previously disagreed, the Second Order did not leave any unresolved issues for the parties to negotiate, thus putting the Tribe in the untenable position of either accepting a contract with terms that violated the ISDA or facing contempt sanctions for refusing to accept those terms. Accordingly, the Tribe filed a Notice of Appeal and Motion to Stay Pending Appeal. The District Court then vacated its deadline. This Court directed the parties to brief the issue of whether the Court had jurisdiction, then reserved decision and directed the parties to brief the merits. STANDARD OF REVIEW A de novo standard of review applies to appeals concerning only legal issues. Equal Employment Opportunity Comm n v. Wiltel, Inc., 81 F.3d 1508, 1513 (10th Cir. 1996); Davis v. Mineta, 302 F.3d 1104, 1111 (10th Cir. 2002). Because the issues arising 9

17 Case: Document: Date Filed: 05/05/2008 Page: 17 from the injunction in the Second Order are purely legal, the de novo standard of review applies here. SUMMARY OF THE ARGUMENT The Tribe appeals the two issues decided by the District Court in its Second Order, namely the CSC language and the contract effective date mandated by that Order. The District Court required use of the IHS s proposed CSC-limiting contract language violating the clear and unambiguous statutory funding requirements and contract formation language of the ISDA, subverting congressional intent and purpose, and violating the IHS s own policies. The District Court s reversal of the contract declination had the effect of approving the Tribe s original contract proposal, including the contract effective date, by operation of law, therefore requiring that the contract effective date should be the date stated in the Tribe s contract proposal. Lastly, aside from the adequacy of its decision, the District Court exceeded its authority by even considering issues outside the scope of whether IHS s declination of the Tribe s contract was unlawful. ARGUMENT I. THE IHS S INTERPRETATION OF THE ISDA IS NOT ENTITLED TO DEFERENCE, IS CONTRARY TO THE ISDA, AND FRUSTRATES THE INTENT AND PURPOSE OF THAT ACT. In its Second Order, the District Court endorsed the IHS s interpretation of the ISDA that the IHS has authority to unilaterally require the addition of CSC-limiting language to the AFA. That interpretation is not entitled to deference and should be 10

18 Case: Document: Date Filed: 05/05/2008 Page: 18 rejected in this de novo review because it ignores the ISDA and frustrates its intent and purpose. A. The IHS s Interpretation of the ISDA is Not Entitled to Deference. The interpretation of the ISDA offered by the IHS is not entitled to deference because the IHS has not been delegated authority by Congress to interpret the ISDA s language regarding CSC. 5 See Adams Fruit Co., Inc. v. Barrett, 494 U.S. 638, 649 (1990), superseded by 29 U.S.C on other grounds, ( [a] precondition to deference under Chevron is a congressional delegation of administrative authority. ); see also Murphy Exploration and Prod. Co. v. Dep t of Interior, 252 F.3d 473, (D.C. Cir. 2001) ( Unless the agency is the recipient of congressionally delegated power, there is no reason to defer to its interpretations.... ). To the contrary, in 1994, Congress stripped the IHS of much of its authority under the ISDA, in large part because of the agency s failure to implement Congressional intent to facilitate contracting for tribes. S. Rep. No , 103d Cong.2d Sess. 14 (1994)). The result was 450k(a)(1), which established that the Secretaries were not authorized to promulgate regulations or impose any nonregulatory requirement on any self-determination contract issue other than 16 limited areas not at issue here. Id. As stated in Ramah Navajo School Board, 87 F.3d at 1350 (quoting S. Rep. No , 14): [t]he legislative history to [ 450k(a)(1)] notes that [b]eyond the areas specified in [the Act] (such as the Federal Tort Claims Act, declination 5 The District Court s orders did not address the level of deference to be given the IHS s position; however, the Second Order implicitly shows substantial deference to the agency. 11

19 Case: Document: Date Filed: 05/05/2008 Page: 19 appeal procedures, the Contract Disputes Act, etc.), no further delegated authority is conferred [on the IHS]. Congress has clearly expressed in the ISDA [] its intent to circumscribe the discretion of the Secretary. Ramah Navajo School Board, 87 F.3d at 1344 (referring to 25 U.S.C. 450k(a)); see also Miller v. French, 530 U.S. 327, 341 (2000) ( where Congress has made its intent clear, [courts] must give effect to that intent. ) (Internal citation omitted). Importantly, Congress left the Secretary with as little discretion as feasible in the allocation of [CSC]. Ramah Navajo School Board, 87 F.3d at 1344; see also Ramah Navajo Chapter, 112 F.3d at 1463 (IHS lacks discretion to deprive a tribe of the full amount of [CSC].... ). Consequently, the IHS s interpretation of the Act s CSC language is not entitled to any deference. B. The IHS s Position, as Adopted by the District Court, Misinterprets the ISDA and Requires the Tribe to Accept Contract Terms that Violate the ISDA. In the First Order, the District Court stated: only the legislative branch and not the executive branch of government may make ultimate decisions regarding public funds. The IHS may not unilaterally amend the [ISDA] by altering the declination [or contract] criteria in the [ISDA], eliminating an element of the funding scheme for Self-Determination contracts, or developing new contract language that contradicts the statutory model language developed by Congress. Aplt. App. at 312 (emphasis added). One element of that funding scheme is that CSC funding, along with the Secretarial amount, shall be added in full to an approved contract, 25 U.S.C. 450j-1(g), with payment thereafter subject only to the availability of appropriations. 25 U.S.C. 450j-1(b), 450l(c) (model agreement 1(b)(4)). In an about-face, the Second Order authorized the IHS s unilateral amendment of the ISDA by 12

20 Case: Document: Date Filed: 05/05/2008 Page: 20 requiring new language in the AFA, which, as the AFA becomes part of the contract, eliminates an element of the ISDA s funding scheme (CSC) and contradicts the model agreement. Aplt. App. at 394, 397, 399. Specifically, the Second Order required the Tribe s CSC funding amount be stated as $0 in the AFA and that the Tribe would be placed on the IHS s shortfall list and eventually paid CSC if and when funding became available. Id. This turned the ISDA s statutory funding scheme upside down. 1. The IHS s CSC language contradicts the ISDA s funding provisions. The terms proffered by the IHS and required by the District Court limit the Tribe s entitlement to CSC and contradict the ISDA s plain language. By requiring the Tribe to insert $0 in the AFA as the level for its CSC funding, the IHS convinced the District Court to countermand the ISDA s provisions that: (1) require the parties to add CSC to the amount of the contract, 25 U.S.C. 450j-1(a)(2) ( [t]here shall be added... contract support costs... ); (2) require that CSC shall consist of an amount for the reasonable costs for activities which must be carried on by the [Tribe], id.; and (3) expressly instruct 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 [25 U.S.C. 450j-1(a)]. 25 U.S.C. 450j-1(g). The provisions in the ISDA regarding CSC and the full amount of funds to which the contractor are entitled are clear and unambiguous self-determination contracts shall include CSC and, as such, the plain meaning of the statute controls, Manning v. Astrue, 510 F.3d 1246, 1249 (10th Cir. 13

21 Case: Document: Date Filed: 05/05/2008 Page: ) (internal citation omitted). Accordingly, the IHS s interpretation of the ISDA is erroneous. 6 In addition, the IHS argued, and the District Court agreed, that CSC should be set at $0 in the AFA, because to do otherwise would force the IHS to enter into a contract that it would immediately have to breach, as a consequence (according to the IHS) of Congress not appropriating sufficient funds to pay CSC. Aplt. App. at 397. That interpretation again turns the statutory scheme upside down. Under the Act, the full statutory amount, including CSC, is added to the contract and payment is excused only if appropriations are subsequently found not to be legally available. Thus the ISDA provides, in 25 U.S.C. 450j-1(b), that [n]otwithstanding any other provision in this Act, the provision of funds under this Act is subject to the availability of appropriations.... See Babbitt v. Oglala Sioux Tribal Pub. Safety Dept., 194 F.3d 1374, 1378 (Fed. Cir. 1999) ( The language of 450j-1(b) is clear and unambiguous[.] ). This precise scheme is repeated in the model agreement at 1(b)(4), which commands that the AFA specify CSC as not less than the applicable amount 6 This plain meaning rule of statutory construction is bolstered by the Indian canon of construction, which the ISDA incorporates and which this Court has expressly and repeatedly applied in interpreting the ISDA. 25 U.S.C. 450l(c) (model agreement 1(a)(2)) ( Each provision of the [ISDA] and each provision of this Contract shall be liberally construed for the benefit of the Contractor [i.e., the Tribe] to transfer the funding... from the Federal Government to the Contractor. ); see also N.L.R.B. v. Pueblo of San Juan, 276 F.3d 1186, 1190 (10th Cir. 2002) ( [a]mbiguities in federal law have been construed generously in order to comport with... tribal notions of sovereignty and with the federal policy of encouraging tribal independence. ) (Internal citation omitted); Ramah Navajo Chapter, 112 F.3d at The canon of construction favoring tribes even controls over the more general rule of deference to agency interpretations of ambiguous statutes in cases where, unlike here, the rule of agency deference might otherwise apply. Id. at 1462 (internal citations omitted). 14

22 Case: Document: Date Filed: 05/05/2008 Page: 22 [from 450j-1], (which here would not be the $0 insisted upon by the IHS) and also stating that the Secretary is to make available this amount in full [s]ubject to the availability of appropriations. The IHS s insistence that the availability issue be addressed first through a unilaterally mandated, prospective agreement that CSC funding is unavailable and the amount of CSC in the AFA then specified accordingly as $0, is precisely the opposite of what the Act commands. 7 The IHS s assertion that it cannot enter a contract containing a CSC amount because of insufficient appropriations renders both 25 U.S.C. 450j-1(b) and the opening clause of model agreement 1(b)(4) nugatory. Such an interpretation, endorsed by the Second Order, is also prohibited by established principles of statutory construction. Andersen v. Dir. Office of Workers Compensation Programs, 455 F.3d 1102, 1106 (10th Cir. 2006) (statutory interpretation must not render any part of the statute meaningless, redundant, or superfluous. ). In adopting the IHS s position, the Second Order suggested that any other interpretation would be illogical in that it would require a contract imposing on the IHS unachievable contractual obligations. Aplt. App. at 396. But, to the contrary, Congress anticipated that possibility by commanding that the IHS will not have to pay CSC (or any other contract amount) if the availability of appropriations condition is triggered. Thus, Congress, in both the ISDA and its model agreement, required both the inclusion of CSC in self-determination contracts and excused the IHS from paying that amount if 7 It is also contrary to the history of the IHS, as that agency has often claimed CSC funds were unavailable, only for the courts to later find such funds available. See Cherokee III, 543 U.S

23 Case: Document: Date Filed: 05/05/2008 Page: 23 appropriations are later determined not to be legally available to do so. These ISDA provisions cannot be ignored. 2. The alternative CSC language is improper because the language does not comply with the ISDA s requirements for contract formation. In 25 U.S.C. 450l(a), the ISDA provides two options for contract formation: the parties must either use the model agreement terms or both parties must agree to additional terms. Furthermore, 25 U.S.C. 450m-1(b) states that [t]he Secretary shall not revise or amend a self-determination contract with a [tribe] without the [tribe s] consent. The IHS s own rules also explicitly protect tribes from being forced to accept unfavorable or objectionable terms that are not included in the ISDA s model agreement. IAPH, supra, at Regardless of its subject matter therefore, the IHS s additional AFA language cannot be included in the contract or the AFA unless it complies with terms of the model agreement or the Tribe agrees to its inclusion. a. The alternative CSC language added to the AFA is not consistent with the ISDA s model agreement. The IHS s proposed language ignores the ISDA s funding provisions, 25 U.S.C. 450j-1(g) and 25 U.S.C. 450l(c) (model agreement 1(b)(4)), which command that the AFA specify the full Secretarial and CSC amounts, with payment of that contracted amount subject to the availability of appropriations. IHS s language violates those funding provisions, which are expressly incorporated into the model agreement, by eliminating CSC funding. Consequently, the alternative CSC language is inconsistent with the model agreement and violates the ISDA. 16

24 Case: Document: Date Filed: 05/05/2008 Page: 24 In addition, however, the language cannot be included in the AFA because it contradicts the model agreement s description of what is to be included in the AFA. The model agreement requires that the AFA shall only contain... terms that identify... the funds to be provided, and the time and method of payment[.] 25 U.S.C. 450l(c) (model agreement 1(f)(2)(A)(i)). The IHS s proposed language does not identify the funds to be provided ; that is, those funds calculated pursuant to 25 U.S.C. 450j- 1(a) of the ISDA. Rather, it identifies the funds only as $0. 25 U.S.C. 450l(c). Nor does it identify the time and method of payment. The implied method of payment, here was, presumably, that the Tribe not be paid at all and instead be placed on the IHS s shortfall list, which does not correlate with the obvious meaning of the term method of payment. This is plain from the payment provision of the model agreement, which in subsection (B), is titled [q]uarterly, semiannual, lump-sum, and other methods of payment. 25 U.S.C. 450l(c) (model agreement 1(b)(6)(B)). This provision does not include or even anticipate that placement on the shortfall list could be considered as an additional, unstated method of payment. Id. The IHS s proposed language improperly expands the unambiguous meaning of the funds to be provided, and the time and method of payment to include a provision that provides that the Tribe is not to be provided any CSC (but may perhaps be paid at some point in the future), rather than following the plain meaning of these terms, which includes whether the Tribe will be paid annually or quarterly, by check or direct deposit. The IHS s proposed method of payment does not comply with the ISDA s model agreement and cannot be justified. 17

25 Case: Document: Date Filed: 05/05/2008 Page: 25 b. The additional language would unilaterally modify the contract terms. Language that deviates from the model agreement can be included in a selfdetermination contract if, and only if, both parties agree to its inclusion. 25 U.S.C. 450l(a)(2); IAPH, supra, at The Tribe consistently and repeatedly objected to the IHS s attempts to include language limiting its statutory CSC obligations. Aplt. App. at 116, 119, 120, 122, 123, 141, 183, 184. Nevertheless, the Second Order requires inclusion of the very limitation that the Tribe opposed. Aplt. App. at Mandating that the IHS s CSC-limiting language be included in the Tribe s contract therefore defies the express intent of Congress in the ISDA, 25 U.S.C. 450l(a), the agency s own rules (i.e. that the AFA shall only contain provisions from the model agreement or that are agreed to by the parties), IAPH, supra, at 5-12, and basic premises of contract law requiring both parties to agree to contract modifications. See In re Woodcock, 45 F.3d 363, 367 (10th Cir. 1995); Central Coast Const. v. Lincoln-Way Corp., 404 F.2d 1039, 1045 (10th Cir. 1968); Prater v. Ohio Education Ass n, 505 F.3d 437, 443 (6th Cir. 2007) ( the option of either party to modify a contract unilaterally would defeat the essential purpose of reaching an agreement in the first place to bind the parties prospectively. ). Indeed, beyond simply including language that the Tribe consistently opposed, the addition of the IHS s language would expressly negate the parties prior agreement. During negotiation of the Tribe s contract, both parties had agreed upon all terms of the contract, including the funding amounts for the contract. See infra Statement of Facts. The only issue outstanding at the conclusion of those negotiations was the disagreement 18

26 Case: Document: Date Filed: 05/05/2008 Page: 26 over the inclusion of the IHS s proposed CSC language. Id. Therefore, beyond violating the ISDA by requiring contract terms on which the parties did not agree, the addition of the IHS s CSC-waiver language to the AFA, stating that the Tribe is entitled to $0 in CSC funds, ignores and negates the parties prior agreement as to funding amounts, including CSC funding. C. The IHS s Interpretation Frustrates the Intent and Purpose of the ISDA. The effect of the IHS s erroneous statutory interpretation and additional AFA language is significant. Not only does its position violate the ISDA and established statutory interpretation principles, the IHS s approach also frustrates this Court s view of the intent and purpose of the ISDA: [t]he basic idea behind the ISDA is to promote tribal autonomy and selfdetermination 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 operation of them. Cherokee I, 311 F.3d at The IHS s additional language would eliminate the Tribe s right to obtain CSC, even if appropriations are legally available to do so. In Cherokee III, for example, the IHS argued appropriations were not available to pay certain CSC obligations, but it turned out the IHS was wrong. IHS may now be wrong again about its appropriations. If the IHS is incorrect, and CSC funds are available, the Tribe has a right under the ISDA to be paid (or to recover damages for any non-payment, as occurred in Cherokee III, 543 U.S. 631). Indeed, even if the IHS were correct, the situation could change if Congress 19

27 Case: Document: Date Filed: 05/05/2008 Page: 27 were to enact a supplemental appropriation increasing the CSC appropriation (as Congress did in FY 2007). But, if the AFA artificially shows the Tribe s need is $0, the Tribe might never receive its statutorily-required CSC, even if those funds became available. Such a result would not ensure that [the Tribe does] not suffer a reduction in funding for those programs simply because [it] assume[s] operation of them. Cherokee I, 311 F.3d at II. THE EFFECTIVE DATE OF THE CONTRACT SHOULD BE THE DATE THAT THE CONTRACT WOULD HAVE BEGUN IF NOT FOR THE IHS S ILLEGAL DECLINATION. Upon the District Court s reversal of the IHS s wrongful declination, the Tribe s self-determination contract was approved by operation of law. Crownpoint Inst. of Tech. v. Norton, Civ. No JP/DJS (D.N.M. Sept. 19, 2005)); accord Cheyenne River Sioux Tribe v. Kempthorne, 496 F. Supp. 2d 1059, 1068 (D.S.D. 2007) ( [g]iven the Secretary s failure to comply with the declination statutes and regulations... the contract and successor AFA... are deemed approved by operation of law. ). Accordingly, the 8 The District Court appears indirectly to have accepted the IHS s assertion that the language the IHS proposed was harmless to the Tribe because, in fact, appropriations are not available to fund any CSC. The court even said that a future claim for such costs would be frivolous. Aplt. App. at 397. But that issue was never litigated in this case and was never the focus of the Tribe s suit to secure a model agreement. It is an issue that was never briefed and never conceded, and it would be ripe only if and when the contract year is over and the Tribe decides whether to test it. Suffice it to say, in FY 2008 the IHS had some $5,000,000 to pay CSC for new or expanded programs, far more than the Tribe s CSC requirement and, in Cherokee III, the Supreme Court observed that the government can be held liable if appropriations are legally available to pay a contractor, even if [it] is insufficient to pay all the contracts the agency has made. Cherokee III, 543 U.S. at 637; Consolidated Appropriations Act, 2008, Pub. L. No , 121 Stat (2007). It was thus error for the District Court to address an unbriefed issue that is not even ripe for adjudication. See NCAI Amicus Brief at. 20

28 Case: Document: Date Filed: 05/05/2008 Page: 28 contract effective date is the date designated in the Tribe s amended contract proposal (October 1, 2005), upon which the parties agreed during contract negotiations, not the date that the Tribe begins operation of the Clinic. A. To Require the Contract Effective Date be the Date the Tribe Begins Operation of the Clinic Undermines the Intent and Policy of the ISDA. As this Court has noted, [t]he Act was intended to assure maximum participation by tribes in the planning and administration of federal services, programs, and activities for Indian communities. Ramah Navajo Chapter, 112 F.3d at ; see also Babbitt, 194 F.3d at 1376; 25 U.S.C. 450a; 25 C.F.R (b)(7). The District Court s requirement that the Tribe s contract begin on the date that the Tribe actually begins exercising control of the Clinic frustrates the Act s purposes by subjecting ISDA contracts to additional rounds of negotiation and possible declination, thereby disadvantaging tribes solely through the unlawful actions of the IHS, as in this case. As described above, during negotiation of its self-determination contract proposal, the Tribe utilized and relied upon the then-current Clinic budget figures to calculate the ISDA-mandated funding amounts in its proposal. The IHS did not object to the amounts proposed by the Tribe. See infra Statement of Facts. Despite this, the IHS maintains that the Tribe s contract cannot be effective until the Tribe assumes operation of the Clinic. Aplt. App. at As a result, even though the Tribe previously developed and the IHS previously agreed to the contract funding amounts based on the Clinic s budget prior to October 1, 2005, if the contract has a 2008 effective date, the Tribe and the IHS would have to re-calculate and re-negotiate contract funding amounts based on the current 21

29 Case: Document: Date Filed: 05/05/2008 Page: 29 Clinic budget. Given the likelihood of changes in these figures since 2005, it is conceivable that the re-negotiation could result in the IHS again declining the contract, based on a disagreement regarding the updated figures. 25 U.S.C. 450f(a)(2)(D) ( the amount of funds proposed under the contract is in excess of the applicable funding level for the contract, as determined under... [25 U.S.C. 450j-1(a)]) (brackets in original)). The Second Order therefore re-opens the already completed contract negotiation and declination process by mandating an effective date different than that which the parties already contemplated and agreed upon during their negotiations. The re-opening of negotiations regarding the Tribe s contract proposal due to the Second Order s mandated effective date is solely attributable to the IHS s unlawful declination of the Tribe s initial final contract proposal in But for the IHS s insistence on CSC contract language that violated the ISDA, Aplt. App. at 314, the Tribe would have entered a self-determination contract as it proposed on October 1, Similarly, if the contract effective date is not October 1, 2005, the Tribe may be forced to accept reduction(s) in funding and/or seniority that it would have otherwise enjoyed, had it entered the contract as it proposed. Furthermore, the Tribe would be prevented from collecting other sums, which could include interest on the amounts it would have been paid to operate the Clinic and collections from third parties that it would have received since October 1, 2005, among other funds. 9 9 As more fully described below, the District Court was convinced that the Tribe s only concern with the contract effective date was preserving a windfall damages claim. The IHS and the District Court clearly overstated the potential for such claims and the Tribe maintains that, rather than dismiss its arguments on the merits based on speculative 22

30 Case: Document: Date Filed: 05/05/2008 Page: 30 The derogation of the Tribe s lawful right to a contract beginning on October 1, 2005, therefore frustrates the basic idea behind the ISDA by subjecting the Tribe to potentially reduced funding and privileges, as well as to another round of review, negotiation, and declination, solely because the IHS illegally declined its initial contract proposal. Cherokee I, 311 F.3d at This result undermines the intent of Congress when it approved and amended the ISDA with the goal of developing procedures that encourage and streamline self-determination contracting by removing agency blockades. See Pascua Yaqui Tribe of Arizona, Docket No. A-99-20, 2, 6 (HHS Appeals Bd. Jan. 12, 1999) ( The contrary interpretation proposed by IHS on the other hand would be inherently unfair to tribes that had exercised their appeal rights under the ISDA... The appeals process authorized by Congress for self-determination contracts would be undercut if an appellant could not receive an approval of its contract proposal that relates back to the declination that is under appeal. If appellant prevails on the merits of its proposed contract, it should therefore be entitled to the same contract as if IHS had properly approved its contract in the first instance. ) The result promoted here by the IHS rewards the agency for its unlawful acts, punishes tribes for seeking to enforce their rights, and creates an incentive for additional improper agency treatment of tribes of the kind that Congress specifically sought to curtail in the ISDA s 1994 amendment. Pub. L , 108 Stat (1994). concerns over damages, the proper forum to determine whether the Tribe is entitled to any damages flowing from the IHS s unlawful declination of its contract proposal would be a subsequent trial on damages before the District Court. 23

31 Case: Document: Date Filed: 05/05/2008 Page: 31 B. The IHS Overstates the Potential for Damages and Cites Distinguishable Authority in Support Thereof. Contrary to the IHS s assertions, the October 1, 2005, contract effective date on which the parties initially agreed will not result in a windfall to the Tribe. In support of its fears, the IHS relies heavily on Samish Indian Nation v. United States, 419 F.3d 1355 (Fed. Cir. 2005). In Samish, the Federal Circuit Court of Appeals found that a tribe that was wrongfully refused federal recognition and was seeking past program money and CSC under the ISDA, was not entitled to such a remedy because such a remedy would provide them nothing but a windfall. Id. at That finding is easily distinguishable from the instant case. The Samish tribe was not permitted to contract for its programs under the ISDA during the time it was not federally recognized. Therefore, the Samish s claim would have required the court to make three distinct findings: first, that the tribe should have been federally recognized; second, that, once recognized, the tribe should have been entitled to a self-determination contract, even though the tribe had never proposed such a contract; and third, that the tribe would have been entitled to program funds and CSC for the period of time during which the Tribe was not federally recognized and did not have a self-determination contract. Rather than make that leap, the court in Samish found that awarding damages in such a situation would, indeed, be a windfall. Id. The Tribe in this case has been a federally recognized tribe for the entire period in which it has sought to assume responsibility for its Clinic from the IHS. The only reason that the Tribe has not been able to operate the Clinic under the ISDA is the IHS s illegal 24