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Supreme Court considers petition in contract support cost case

Friday, June 26, 2015

A view of the U.S. Supreme Court. File Photo © Indianz.Com

Contract support costs in self-determination contracts are once again before the U.S. Supreme Court for the third time in a decade.

The Indian Self-Determination and Education Assistance Act of 1975 authorizes tribes to manage programs at the Bureau of Indian Affairs and the Indian Health Service. The law requires the agencies to enter into contracts to cover the costs of running the programs.

The law also requires the BIA and the IHS and to pay additional support costs but the agencies never fully funded those costs. The billion-dollar shortfalls resulted in two Supreme Court decisions, the first in 2005 and the second in 2012, that confirm that the federal government must pay "all" of the costs.

"Consistent with longstanding principles of government contracting law, we hold that the government must pay each tribe’s contract support costs in full," Justice Sonia Sotomayor wrote for the majority in the 2012 Salazar v . Ramah Navajo Chapter decision.

Despite the apparent certainty from the justices, the lower courts have not always acted consistently in addressing the details of contract support disputes. That's why the Obama administration is urging the Supreme Court to resolve a conflict in the way the costs have been treated by the D.C. Circuit Court of Appeals and the Federal Circuit Court of Appeals.

"This court’s review is warranted to resolve that conflict," the Department of Justice said in a May 26 brief in Menominee Indian Tribe of Wisconsin v. US.

At issue is whether the Menominee Nation submitted its contract support cost claims within six years as required by the Contract Disputes Act. The D.C. Circuit in September 2014 held that the tribe did not take action in a timely manner with respect to an IHS contract.

"The Menominee Tribe faced no extraordinary circumstances because the obstacles the tribe confronted were ultimately of its own making," Judge Nina Pillard wrote in the unanimous decision.

"The tribe makes three arguments that 'extraordinary circumstances' prevented it from timely filing its claims. We examine them in turn to explain why we ultimately conclude that, while the events the tribe identifies were perhaps confusing or discouraging, they cannot be characterized as 'extraordinary circumstances,'" the decision continued.

The Federal Circuit, however, reached a different conclusion in a case involving the Arctic Slope Native Association of Alaska. By a 2-1 vote, the court said there indeed were "extraordinary circumstances" that could overcome the six-year deadline in the Contract Disputes Act.

Since the circumstances in both cases are similar, government attorneys believe the Supreme Court should resolve the dispute by granting the petition. The brief argues that the D.C. Circuit got it right while the Federal Circuit got it wrong.

"Not only does the Federal Circuit’s ASNA decision threaten to expand significantly the scope of equitable tolling in CDA actions against the government over which the Federal Circuit exercises appellate jurisdiction, the question presented has great practical importance for the government’s efforts to achieve an orderly resolution of a significant number of outstanding tribal claims for contract support costs in the wake of this Court’s decisions in Cherokee Nation, and, more recently, in Ramah Navajo," DOJ wrote.

The Menominee Nation, on the other hand, believes the Federal Circuit made the right call.

"The Federal and D.C. Circuits’ conflicting decisions, ruling on materially similar facts involving tribal claims for withheld CSC funding, result in diametrically opposed precedents," the tribe wrote on November 3, 2014.

The outcome would have an effect on the dollar figure of past contract support cost claims across the nation. If the Federal Circuit standard prevails, tribes can overcome the six-year limit as long as they showed the demonstrate "diligence and extraordinary circumstances," the Menominee Nation pointed out in its brief.

As of January 2015, the Obama administration settled $679 million in contract support cost shortfalls at the IHS. Negotiations continue with tribes and Alaska Native organizations and the final figure is expected to top $1 billion.

President Barack Obama fully funded contract support costs in his fiscal year 2016 budget for the IHS. H.R.2822, the Interior appropriations bill, provides all of the $918 million that was requested.

However, Obama is threatening to veto the measure because it would not allow the IHS to cover any shortfalls that might arise. In a statement of administration policy, the White House Office of Management and Budget said in urged Congress to adopt a "mandatory" funding stream for contract support costs.

The House began consideration of H.R.2822 yesterday. Debate is expected to continue over the next few days.

Meanwhile, the Supreme Court considered the Menominee Nation petition in a closed-door conference yesterday. An announcement on whether the justices will take the case could come next week.

DC Circuit Decision:
Menominee Indian Tribe of Wisconsin v. USA (September 2, 2014)

Federal Circuit Decision:
Arctic Slope Native Association v. Sebelius (November 9, 2012)

Supreme Court Decisions:
Salazar v. Ramah Navajo Chapter (June 18, 2012)
Cherokee Nation v. Leavitt (March 1, 2005)