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Court rebuffs tribes on contract funding dispute
WEDNESDAY, NOVEMBER 27, 2002

Tribes seeking to take greater control of their own affairs are limited by the amount of money the federal government considers appropriate, a federal appeals court ruled on Tuesday.

In a unanimous ruling, the 10th Circuit Court of Appeals struck down a challenge to the way the Indian Health Service (IHS) provides funds for self-determination contracts. A three-judge panel said tribes will have to live with budget shortfalls that run in the millions of dollars.

"As this case demonstrates, the adequacy of the funding provided for tribal indirect costs has proven to be a recurring and troublesome issue," wrote Circuit Judge Stephen H. Anderson for the majority.

The decision affirms a lower court ruling in favor of the government. The Cherokee Nation of Oklahoma and the Duck Valley Shoshone-Paiute Tribe of Nevada sued to obtain money they believe they are entitled to.

But tribes nationwide are affected because the courts have deferred to agency funding limits at the Department of Health and Human Services (HHS) and at the Department of Interior (DOI). The 9th Circuit Court of Appeals is considering the issue when it rehears a similar dispute next week.

At issue is a key Indian policy that ushered in a new era in tribal control. Under the the Indian Self-Determination and Education Assistance Act, first passed in 1975, tribes can take over federal programs by entering into contracts with federal agencies.

The contracts are to cover the amount of money the agency would have normally used to carry out the same functions. They are also to cover "direct and indirect expense" costs associated with operating the programs.

It is the latter set of costs that has led to disputes between tribes and federal agencies, which themselves are limited by the amount of money Congress provides. With funding shortfalls running as high as $81 million, according to late 1990s studies, the issue is a critical one to resolve.

In April of this year, a split 9th Circuit ruled against the Navajo Nation in a related self-determination case. But Circuit Judge Betty B. Fletcher pointed out a failing in the federal-tribal relationship.

"Reduced to its simplest terms, the majority opinion defeats the purpose of the Indian Self-Determination Act by allowing Indians to administer federal programs but denying them the funds to do the job," she wrote in her dissent.

A full panel of the 9th Circuit will rehear the Navajo case on December 2 in San Francisco. The major issue before the judges is how much courts should defer to the agencies in light of the federal government's obligations to Indian tribes.

Depending on the outcome, the issue could be ripe for Supreme Court review, particularly if the decision conflicts with the 10th Circuit.

Get the Decision:
Cherokee Nation v. HHS (November 2002)

Related Decision:
Navajo Nation v. HHS (April 2002) | Order for Rehearing (October 2002)

Related Stoires:
Navajo Nation challenges contract policy (10/04)