Salazar v. Ramah Navajo Chapter

PETITIONER: Kenneth L. Salazar, et al.
RESPONDENT: Ramah Navajo Chapter, et al.
LOCATION: Ramah Navajo Chapter

DOCKET NO.: 11-551
DECIDED BY: Roberts Court (2010-2016)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 567 US (2012)
GRANTED: Jan 06, 2012
ARGUED: Apr 18, 2012
DECIDED: Jun 18, 2012

ADVOCATES:
Carter G. Phillips - for the respondent
Mark R. Freeman - Assistant to the Solicitor General, Department of Justice, for the petitioner

Facts of the case

In 1975, the Indian Self-Determination and Educational Assistance Act (ISDA) became law. Among other things, the ISDA directs the Secretary of the Interior, at the request of any Indian tribe, to enter into contracts which permit tribal organization to administer federal programs that would otherwise be directly administered by the Secretary. The ISDA further requires the Secretary to pay the tribe's reasonable contract support costs, or the costs that the tribe would incur operating the program that the Secretary would not incur. The payment of these costs was made subject to the availability of appropriations, and Congress had imposed a statutory cap on the appropriations available to pay such costs.

Ramah Navajo Chapter entered into multiple ISDA contracts for the administration a number of federally funded programs. The Ramah Navajo Chapter originally filed suit against the Secretary in 1990 on behalf of all BIA tribal contractors under the ISDA to challenge the methodology that Interior's Office of the Inspector General used to set indirect cost rates. In 1999 the district court granted the plaintiffs leave to add a new claim for the alleged underpayment of contract support costs due to insufficient appropriations. Both parties moved for summary judgment. The district court eventually granted summary judgment for the government, rejecting tribal demands for contract support costs in excess of the express statutory caps on the funds available to pay such costs.

The tribes appealed, and the United States Court of Appeals for the 10th Circuit reversed. The appeals court held that the government could be required to pay all of the contract support costs requested by every tribal contractor, even in excess of the statutory cap, because Congress appropriated sufficient funds to satisfy the demands of any single contractor considered in isolation. The government appealed the appellate court's decision.

Question

Under the Indian Self-Determination and Education Assistance Act, is the government required to pay all of the contract support costs incurred by a tribal contractor, as mandated by the Act, if payment of those costs would exceed the express statutory cap on the appropriations available to pay such costs?

Media for Salazar v. Ramah Navajo Chapter

Audio Transcription for Oral Argument - April 18, 2012 in Salazar v. Ramah Navajo Chapter

Audio Transcription for Opinion Announcement - June 18, 2012 in Salazar v. Ramah Navajo Chapter

John G. Roberts, Jr.:

In case 11-551, Salazar versus Ramah Navajo Nation.

Justice Sotomayor has the opinion of the Court.

Sonia Sotomayor:

This case concerns the Indian Self Determination and Education Assistance Act or ISDA.

ISDA allows tribes to provide services like law enforcement or education that otherwise would have been provided by the Federal Government.

ISDA directs the Secretary to enter into contracts with willing tribes.

Under those contracts, tribes commit to providing these services and the Government computes to paying tribes for the full costs of providing the services.

ISDA requires the Secretary to promise to pay the full amount of contract support cost for each tribe's contract, but each contact is made subject to the availability of appropriations.

From 1994 to 2001, various tribes entered into ISDA contracts with the Government.

Each year, Congress appropriated more than enough money so that the Secretary could have paid any individual tribe the amount of contract support cost that tribe was due.

Congress did not appropriate enough money, however, to allow the Secretary to pay all tribes in full.

Instead, the Secretary paid each tribe only some, but not all of the amount specified by each tribe's contracts.

The tribes, unsatisfied, sued for breach of contract.

The question presented in this case is whether on these facts the Government is obligated to pay the tribes the full amount of contract support costs specified by their contracts.

The District Court found that the Government was not obligated to pay tribes more in the aggregate than the total amount that Congress had appropriated.

A divided panel of the Tenth Circuit reversed holding the charge were entitled to be paid in full.

For the reasons we explain more fully in our opinion filed today, we now affirm the judgment of the Court of Appeals.

When Congress appropriates a lump sum of money to an agency, the agency generally has discretion to allocate those funds as it sees fit, consistent with any limitations in the appropriation.

Here, Congress appropriated a large some of money that could have been used by the Secretary to pay any tribe's contract support costs in full.

At that point, under long established principles of Government contracting law, the Government's promise to pay became binding.

It is true that in this case the Secretary entered into more contracts than he could afford to honor in full, but when a Government agency enters into more contracts that it can afford to pay, the risk of over obligation generally falls on the Government, not on the contractor.

The Government advances a number of arguments for why this ordinary rule does not apply to ISDA, but we find them unpersuasive.

To the extent that there is any ambiguity, Congress specified in ISDA that these ambiguities be resolved in favor of the tribes.

As a result, the tribes are entitled to recover for breach of contract from the judgment awarded.

The judgment of the Court of Appeals for the Tenth Circuit is affirmed.

The Chief Justice has filed a dissenting opinion in which Justices Ginsburg, Breyer, and Alito have joined.

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