Cherokee Nation of Okla. v. Leavitt

543 U.S. 631, 125 S. Ct. 1172, 161 L. Ed. 2d 66, 2005 U.S. LEXIS 2199
CourtSupreme Court of the United States
DecidedMarch 1, 2005
Docket02-1472
StatusPublished
Cited by132 cases

This text of 543 U.S. 631 (Cherokee Nation of Okla. v. Leavitt) is published on Counsel Stack Legal Research, covering Supreme Court of the United States primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cherokee Nation of Okla. v. Leavitt, 543 U.S. 631, 125 S. Ct. 1172, 161 L. Ed. 2d 66, 2005 U.S. LEXIS 2199 (2005).

Opinions

Justice Breyer

delivered the opinion of the Court.

The United States and two Indian Tribes have entered into agreements in which the Government promises to pay certain “contract support costs” that the Tribes incurred during fiscal years (FYs) 1994 through 1997. The question before us is whether the Government’s promises are legally binding. We conclude that they are.

I

The Indian Self-Determination and Education Assistance Act (Act), 88 Stat. 2203, as amended, 25 U. S. C. § 450 et seq. (2000 ed. and Supp. II), authorizes the Government and Indian tribes to enter into contracts in which the tribes promise to supply federally funded services, for example tribal health services, that a Government agency would otherwise provide. See §450f(a); see also §450a(b). The Act specifies that the Government must pay a tribe’s costs, including administrative expenses. See §§ 450j-1(a)(1) and (2). Administrative expenses include (1) the amount that the agency would have spent “for the operation of the progra[m]” had the agency itself managed the program, § 450j-1(a)(1), [635]*635and (2) “contract support costs,” the costs at issue here. § 450j-l(a)(2).

The Act defines “contract support costs” as other “reasonable costs” that a federal agency would not have incurred, but which nonetheless “a tribal organization” acting “as a contractor” would incur “to ensure compliance with the terms of the contract and prudent management.” Ibid. “[Contract support costs” can include indirect administrative costs, such as special auditing or other financial management costs, § 450j-1(a)(3)(A)(ii); they can include direct costs, such as workers’ compensation insurance, § 450j-l(a)(3)(A)(i); and they can include certain startup costs, § 450j — 1 (a)(5). Most contract support costs are indirect costs “generally calculated by applying an ‘indirect cost rate’ to the amount of funds otherwise payable to the Tribe.” Brief for Federal Parties 7; see 25 U. S. C. §§ 450b(f)-(g).

The first case before us concerns Shoshone-Paiute contracts for FYs 1996 and 1997 and a Cherokee Nation contract for 1997. The second case concerns Cherokee Nation contracts for FYs 1994, 1995, and 1996. In each contract, the Tribe agreed to supply health services that a Government agency, the Indian Health Service, would otherwise have provided. See, e.g., App. 88-92 (Shoshone-Paiute Tribal Health Compact), 173-175 (Compact between the United States and the Cherokee Nation). Each contract included an “Annual Funding Agreement” with a Government promise to pay contract support costs. See, e. g., id., at 104-128, 253-264. In each instance, the Government refused to pay the full amount promised because, the Government says, Congress did not appropriate sufficient funds.

Both cases began as administrative proceedings. In the first case, the Tribes submitted claims seeking payment under the Contract Disputes Act of 1978, 92 Stat. 2383, 41 U. S. C. §601 et seq., and the Act, 25 U. S. C. §§450m-1(a), (d), 458cc(h), from the Department of the Interior (which manages the relevant appropriations). See, e. g., App. 150-[636]*636151, 201-203. The Department denied their claim; they then brought a breach-of-contract action in the Federal District Court for the Eastern District of Oklahoma seeking $3.5 million (Shoshone-Paiute) and $3.4 million (Cherokee Nation). See Cherokee Nation of Okla. v. Thompson, 311 F. 3d 1054, 1059 (CA10 2002). The District Court found against the Tribes. Cherokee Nation of Okla. v. United States, 190 F. Supp. 2d 1248 (ED Okla. 2001). And the Court of Appeals for the Tenth Circuit affirmed. 311 F. 3d 1054 (2002).

In the second case, the Cherokee Nation submitted claims to the Department of the Interior. See App. 229-230. A contracting officer denied the claims; the Board of Contract Appeals reversed this ruling, ordering the Government to pay $8.5 million in damages. Cherokee Nation of Okla., 1999-2 BCA ¶ 30,462, p. 150488; App. to Pet. for Cert. in No. 03-853, pp. 38a-40a. The Government sought judicial review in the Court of Appeals for the Federal Circuit. The Federal Circuit affirmed the Board’s determination for the Tribe. Thompson v. Cherokee Nation of Okla., 334 F. 3d 1075 (2003).

In light of the identical nature of the claims in the two cases and the opposite results that the two Courts of Appeals have reached, we granted certiorari. We now affirm the Federal Circuit’s judgment in favor of the Cherokee Nation, and we reverse the Tenth Circuit’s judgment in favor of the Government.

II

The Government does not deny that it promised to pay the relevant contract support costs. . Nor does it deny that it failed to pay. Its sole defense consists of the argument that it is legally bound by its promises if, and only if, Congress appropriated sufficient funds, and that, in this instance, Congress failed to do so.

The Government in effect concedes yet more. It does not deny that, were these contracts ordinary procurement contracts, its promises to pay would be legally binding. The [637]*637Tribes point out that each year Congress appropriated far more than the amounts here at issue (between $1,277 billion and $1,419 billion) for the Indian Health Service “to carry out,” inter alia, “the Indian Self-Determination Act.” See 107 Stat. 1408 (1993); 108 Stat. 2527-2528 (1994); 110 Stat. 1321-189 (1996); id., at 3009-212 to. 3009-213. These appropriations Acts contained no relevant statutory restriction.

The Tribes (and their amici) add, first, that this Court has said that

“a fundamental principle of appropriations law is that where Congress merely appropriates lump-sum amounts without statutorily restricting what can be done with those funds, a clear inference arises that it does not intend to impose legally binding restrictions, and indicia in committee reports and other legislative history as to how the funds should or are expected to be spent do not establish any legal requirements on the agency.” Lincoln v. Vigil, 508 U. S. 182, 192 (1993) (internal quotation marks omitted).

See also International Union, United Auto., Aerospace & Agricultural Implement Workers of America v. Donovan, 746 F. 2d 855, 860-861 (CADC 1984) (Scalia, J.); Blackhawk Heating & Plumbing Co. v. United States, 224 Ct. Cl. 111, 135, and n. 9, 622 F. 2d 539, 552, and n. 9 (1980).

The Tribes and their amici add, second, that as long as Congress has appropriated sufficient legally unrestricted funds to pay the contracts at issue, the Government normally cannot back out of a promise to pay on grounds of “insufficient appropriations,” even if the contract uses language such as “subject to the availability of appropriations,” and even if an agency’s total lump-sum appropriation is insufficient to pay all

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Bluebook (online)
543 U.S. 631, 125 S. Ct. 1172, 161 L. Ed. 2d 66, 2005 U.S. LEXIS 2199, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cherokee-nation-of-okla-v-leavitt-scotus-2005.