Northern Arapaho Tribe v. Becerra

61 F.4th 810

• Court: Court of Appeals for the Tenth Circuit
• Decided: March 6, 2023
• Docket: 21-8046
• Status: Published

Opinion

Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 1 FILED United States Court of Appeals PUBLISH Tenth Circuit

UNITED STATES COURT OF APPEALS March 6, 2023 Christopher M. Wolpert FOR THE TENTH CIRCUIT Clerk of Court _________________________________

NORTHERN ARAPAHO TRIBE,

Plaintiff - Appellant,

v. No. 21-8046

XAVIER BECERRA, in his official capacity as Acting Secretary, U.S. Department of Health and Human Services; ELIZABETH FOWLER, in her official capacity as Acting Director, Indian Health Service; UNITED STATES OF AMERICA,

Defendants - Appellees.

------------------------------

NATIVE AMERICAN TRIBES; TRIBAL ORGANIZATIONS; INDIAN HEALTH BOARDS; THE NATIONAL CONGRESS OF AMERICAN INDIANS,

Amici Curiae. _________________________________

Appeal from the United States District Court for the District of Wyoming (D.C. No. 0:21-CV-00037-NDF) _________________________________

Geoffrey D. Strommer of Hobbs, Straus, Dean & Walker, LLP, Portland, Oregon (Stephen D. Osborne and Caroline P. Mayhew of Hobbs, Straus, Dean & Walker, LLP, Portland, Oregon; Lucas Buckley of Hathaway & Kunz, LLP, Cheyenne, Wyoming, with him on the briefs), for Plaintiff - Appellant. Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 2

John S. Koppel, Attorney, Appellate Staff, Civil Division, Department of Justice, Washington, D.C. (Brian M. Boynton, Acting Assistant Attorney General, L. Robert Murray, Acting United States Attorney, and Daniel Tenny, Attorney, Civil Division, Department of Justice, Washington, D.C., with him on the brief), for Defendants - Appellees. _________________________________

Before MORITZ, BALDOCK, and EID, Circuit Judges. _________________________________

MORITZ, Circuit Judge. _________________________________

The Northern Arapaho Tribe and the Indian Health Service (IHS) entered into a

contract under the Indian Self-Determination and Education Assistance Act, 25 U.S.C.

§§ 5301–5423 (Self-Determination Act), for the Tribe to operate a federal healthcare

program. Under the contract, the Tribe provides healthcare services to Indians and other

eligible beneficiaries. In exchange, the Tribe is entitled to receive reimbursements from

IHS for certain categories of expenditures, including “contract support costs.” 25 U.S.C.

§ 5325(a)(2), (a)(3)(A).

The contract anticipates that the Tribe will bill third-party insurers such as

Medicare, Medicaid, and private insurers. In return, the Tribe obtains payments that

become program income, which the Tribe is statutorily required to inject back into the

healthcare program “to further the general purposes” of its contract with the government.

§ 5325(m)(1). The Tribe contends that overhead costs associated with setting up and

administering this third-party billing infrastructure, as well as the administrative costs

associated with recirculating the third-party revenue it receives, qualify as reimbursable

contract support costs under the Self-Determination Act and the Tribe’s agreement with

2 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 3

IHS. But when the Tribe attempted to collect those reimbursements, IHS disagreed and

refused to pay. Contending it had been shortchanged, the Tribe sued the government. The

district court, agreeing with the government’s reading of the Self-Determination Act and

the contract, granted the government’s motion to dismiss.

The Tribe appeals, and two members of the panel vote to reverse, albeit for

different reasons. 1 I do so because, in my view, the relevant statutory provisions are

ambiguous, and the Indian canon of statutory construction resolves the ambiguity in the

Tribe’s favor. That is, because the Tribe presents a reasonable interpretation of the

ambiguous statutes, the canon dictates that the statutes “must be construed that way.”

Ramah Navajo Chapter v. Salazar, 644 F.3d 1054, 1062 (10th Cir. 2011) (quoting Ramah

Navajo Chapter v. Lujan, 112 F.3d 1455, 1462 (10th Cir. 1997)), aff’d, 567 U.S. 182

(2012). Judge Eid would instead reverse because the relevant statutes unambiguously

support the Tribe’s interpretation, making it unnecessary to resort to the Indian canon of

construction. Under either of our interpretations, however, the administrative

expenditures associated with collecting and expending revenue obtained from third-party

insurers qualify as reimbursable contract support costs. Accordingly, we reverse and

remand to the district court for further proceedings.

Background

In 1975, President Gerald Ford signed the Self-Determination Act into law “to

achieve ‘maximum Indian participation in the direction of educational as well as

1 Judge Baldock dissents; though he agrees with portions of Judge Eid’s separate opinion, he would nevertheless affirm. 3 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 4

other [f]ederal services to Indian communities so as to render such services more

responsive to the needs and desires of those communities.’” Salazar v. Ramah Navajo

Chapter, 567 U.S. 182, 185–86 (2012) (quoting 25 U.S.C. § 5302(a)). To that end,

the statute directs the secretary of the relevant federal program—in this case, the

Secretary of the Department of Health and Human Services—upon any tribe’s

request, “to enter into a self-determination contract . . . with a tribal organization to

plan, conduct, and administer” health, education, economic, and social programs that

the relevant secretary would otherwise have administered. 25 U.S.C. § 5321(a). In

essence, these self-determination contracts “transfer responsibility for various

programs from federal agencies to the tribes themselves, while maintaining federal

funding of the programs.” Ramah Navajo Chapter, 644 F.3d at 1058. In enacting the

legislation, Congress declared its “commit[ment] to supporting and assisting Indian

tribes in the development of strong and stable tribal governments, capable of

administering quality programs and developing the economies of their respective

communities.” § 5302(b).

In this case, the Tribe has contracted with IHS under Title I of the Self-

Determination Act since 2016 to operate a federal health program that IHS otherwise

would have operated. The contract comprises three documents—the contract itself, an

annual funding agreement, and a document outlining the Tribe’s scope of work—and

provides that both it and the Self-Determination Act must be liberally construed in

favor of the Tribe.

Under the contract, the Tribe provides healthcare services to eligible

4 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 5

beneficiaries. In return, IHS must provide the Tribe two types of funding under the

Self-Determination Act: (1) “program” funds, meaning the amount the Secretary

would have provided had IHS retained responsibility for the healthcare program, 2

§ 5325(a)(1); and (2) “contract support costs,” meaning the reasonable administrative

and overhead costs associated with carrying out the healthcare program,

§ 5325(a)(2)–(3). This appeal concerns the scope of contract support costs, the latter

category of funding.

The Tribe, believing that certain administrative expenses qualified as

reimbursable contract support costs under the statute, requested reimbursement from

IHS for fiscal years 2016 and 2017. IHS disagreed and did not pay. Accordingly, the

Tribe timely sued to recover those unpaid costs under the Contract Disputes Act, 41

U.S.C. § 7104(b)(3). See also 25 U.S.C. § 5331(a).

In its complaint, the Tribe alleges that, by statute and under the contract, it is

required to collect third-party revenue by billing third-party insurers, including

Medicare, Medicaid, and private insurers. And after the Tribe receives the revenue

from third parties, it expends some of that revenue to “provide services within the

scope” of the agreement. App. 15; see also § 5325(m)(1). But “[e]arning, collecting,

and expending” this revenue “on additional health[]care services create[s] additional

overhead costs” that the Tribe contends qualify as reimbursable contract support

costs. Aplt. Br. 20. Accordingly, the Tribe seeks to recover unpaid contract support

2 This is sometimes called the “[s]ecretarial [a]mount.” App. 10; see also Salazar, 567 U.S. at 186. 5 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 6

costs of $538,936 for 2016 and $1,001,201 for 2017 (plus interest on those amounts).

The Tribe also sought a declaratory judgment that IHS’s obligation to pay contract

support costs includes reimbursement for “third-party revenues expended on

health[]care services within the scope of the” contract and the incorporated annual

funding agreement. App. 21.

The government moved to dismiss the Tribe’s complaint. Broadly, the

government argued that neither the Self-Determination Act nor the contract requires

or even authorizes IHS to reimburse contract support costs related to third-party

program income. Looking to the text of the Self-Determination Act’s relevant

provisions, the district court agreed, concluding that the statute unambiguously

favored the government’s interpretation. It therefore dismissed the Tribe’s complaint.

The Tribe appeals.

Analysis

We review a dismissal under Federal Rule of Civil Procedure 12(b)(6) for

failure to state a claim de novo. Vote Solar v. City of Farmington, 2 F.4th 1285, 1289

(10th Cir. 2021). In reviewing “such a motion, [we] must take as true ‘[a]ll well-

pleaded facts, as distinguished from conclusory allegations,’ view all reasonable

inferences in favor of the nonmoving party, and liberally construe the pleadings.”

Reznik v. inContact, Inc., 18 F.4th 1257, 1260 (10th Cir. 2021) (second alteration in

original) (quoting Ruiz v. McDonnell, 299 F.3d 1173, 1181 (10th Cir. 2002)). We

also review questions of statutory and contract interpretation de novo. See

Bancamerica Com. Corp. v. Mosher Steel of Kan., Inc., 100 F.3d 792, 796 n.4 (10th

6 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 7

Cir.), amended by 103 F.3d 80 (10th Cir. 1996).

Generally, when reviewing a dismissal under Rule 12(b)(6), we consider “only

the contents of the complaint.” Goodwill Indus. of Cent. Okla., Inc. v. Phila. Indem.

Ins. Co., 21 F.4th 704, 709 (10th Cir. 2021) (quoting Berneike v. CitiMortgage, Inc.,

708 F.3d 1141, 1146 (10th Cir. 2013)), cert. denied, 142 S. Ct. 2779 (2022). But

here, we may also consider the documents referenced in the complaint—the contract,

the annual funding agreement, and the scope-of-work document—because they are

“central to the [Tribe’s] complaint” and the parties do not dispute the documents’

authenticity. Id. (quoting Berneike, 708 F.3d at 1146).

I. Threshold Matters of Statutory Interpretation

The parties agree that the task of construing the Self-Determination Act must

“begin with its plain text.” Ramah Navajo Chapter, 644 F.3d at 1062. “If the terms of

the statute are clear and unambiguous, they are controlling absent rare and

exceptional circumstances.” Id. (quoting Chickasaw Nation v. United States, 208

F.3d 871, 876 (10th Cir. 2000)). In addition, “the broader context of the statute as a

whole” may clarify “the meaning of a particular provision.” Id. (quoting Conrad v.

Phone Directories Co., 585 F.3d 1376, 1381 (10th Cir. 2009)).

Ordinarily, these bedrock principles of statutory interpretation are

uncontroversial. Not so here. As the Tribe points out, these principles function

differently in cases involving Indian tribes. See Ramah Navajo Chapter, 644 F.3d at

1062. In such cases, federal statutes “are to be construed liberally in favor of [tribes],

with ambiguous provisions interpreted” in their favor. Lujan, 112 F.3d at 1461. This

7 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 8

principle of liberal construction is “rooted in the unique trust relationship between

the United States” and Indian tribes. Id. (quoting Oneida Cnty. v. Oneida Indian

Nation, 470 U.S. 226, 247 (1985)). Thus, under this canon, if a statute “can

reasonably be construed as the Tribe would have it construed, it must be construed

that way.” 3 Id. at 1462 (quoting Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439,

1445 (D.C. Cir. 1988)).

Yet the parties dispute precisely when this canon of construction is triggered.

The Tribe maintains that the canon applies from the outset of the interpretive inquiry

and not only when a statute is ambiguous, whereas the government maintains that the

canon kicks in “[o]nly if the terms of a statute are ambiguous.” Aplee. Br. 17. On this

point, I agree with the government that the canon applies only if the statute is

ambiguous in the first place. 4 As a logical matter, that must be so: If the text of a

statute is unambiguous, there cannot be competing reasonable interpretations. See

Maralex Res., Inc. v. Barnhardt, 913 F.3d 1189, 1201 (10th Cir. 2019) (“A statute is

‘ambiguous if it is reasonably susceptible to more than one interpretation or capable

of being understood in two or more possible senses or ways.’” (quoting Nat’l Credit

Union Admin. Bd. v. Nomura Home Equity Loan, Inc., 764 F.3d 1199, 1226 (10th

Cir. 2014))). Tenth Circuit precedent is in accord. Ramah Navajo Chapter, 644 F.3d

at 1062 (explaining that courts “‘look to traditional canons of statutory

3 This canon applies equally to the interpretation of contracts. See Ramah Navajo Chapter, 644 F.3d at 1057. 4 Because Judge Eid would find the statute unambiguous in favor of the Tribe, she does not reach this interpretive issue. 8 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 9

construction,’” including the canon of construction favoring Indian tribes, “if [the]

statute is ambiguous” (quoting Conrad, 585 F.3d at 1381)).

But one aspect of the Tribe’s argument, which the government does not

dispute, is well-founded: Once a statute is determined to be ambiguous, the rule of

liberal construction is more than an “ambiguity tiebreaker.” Rep. Br. 9. Instead, when

faced with ambiguity, the Tribe need not advance the best interpretation of the statute

at issue, only a reasonable one. See Ramah Navajo Chapter, 644 F.3d at 1057; Lujan,

112 F.3d at 1462 (observing that “the canon of construction favoring [tribes]

necessarily ‘constrain[s] the possible number of reasonable ways to read an

ambiguity in [the] statute’” (alterations in original) (quoting Massachusetts v. U.S.

Dep’t. of Transp., 93 F.3d 890, 893 (D.C. Cir. 1996))).

In sum, I would conclude that the longstanding canon of construction favoring

tribes is triggered only when there is ambiguity in the first place. And once a statute

is found to be ambiguous, the Tribe need only present a reasonable interpretation to

prevail. See Ramah Navajo Chapter, 644 F.3d at 1057. Or, framing the question from

the opposite perspective, to avoid the application of the canon and resort to a tribe’s

reasonable interpretation, the government must “demonstrate that its reading is

clearly required by the statutory language.” Salazar, 567 U.S. at 194. With this

interpretive lens in focus, I turn to the relevant provisions of the Self-Determination

9 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 10

Act. 5

II. Interpretation of the Self-Determination Act

A. 25 U.S.C. § 5325(a)

The central dispute in this case is whether the Tribe is entitled to contract

support costs for its administrative expenditures associated with collecting and then

recirculating revenues generated by billing third-party insurers. The Tribe argues that

the district court, in answering that query in the negative, too narrowly interpreted

the subsection of the Self-Determination Act that defines the contours of contract

support costs, § 5325(a).

Section 5325(a) contains three relevant provisions addressing the “[a]mount of

funds provided” by IHS to contracting tribes. The first two provisions provide an

initial framework distinguishing between program funds and contract support costs:

The Tribe points to two additional sources—the liberal-construction 5

provision in the contract and a statutory provision in the Self-Determination Act—to support its view that the statute and contract must be construed in its favor. See § 5321(g). Notably, however, Congress enacted the statutory provision in 2020, whereas the contract governed during fiscal years 2016 and 2017. The parties have not briefed whether the timing of the provision’s enactment affects § 5321(g)’s application. In any event, because I would find that the Indian canon of construction takes the Tribe as far as it needs to go to prevail in this appeal, no further discussion of these other potential interpretive guides is necessary. 10 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 11

(a) Amount of funds provided

(1) The amount of funds provided under the terms of self- determination contracts entered into pursuant to this chapter shall not be less than the appropriate [s]ecretary would have otherwise provided for the operation of the programs . . . for the period covered by the contract . . . .

(2) There shall be added to the amount required by paragraph (1) contract support costs which 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, but which—

(A) normally are not carried on by the respective [s]ecretary in his direct operation of the program; or

(B) are provided by the [s]ecretary in support of the contracted program from resources other than those under contract.

§ 5325(a). Building on this initial framework, subsection (a)’s third relevant

provision further delineates two types of reimbursable contract support costs, direct

and indirect:

(3)(A) The contract support costs that are eligible costs for the purposes of receiving funding under this chapter shall include the costs of reimbursing each tribal contractor for reasonable and allowable costs of—

(i) direct program expenses for the operation of the [f]ederal program that is the subject of the contract; and

(ii) any additional administrative or other expense incurred by the governing body of the Indian [t]ribe or [t]ribal organization and any overhead expense incurred by the tribal contractor in connection with the operation of the [f]ederal program, function, service, or activity pursuant to the contract,

11 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 12

except that such funding shall not duplicate any funding provided under subsection (a)(1) of this section.

Id.

Interpreting these provisions, the district court concluded the statute

unambiguously favored the government. Specifically, the court held that (1) a cost

must satisfy the conditions of § 5325(a)(2) to be an “‘eligible’ cost under

§ 5325(a)(3)(A),” id. (quoting § 5325(a)(3)(A)); (2) the provisions’ silence about

third-party revenue indicates the Tribe is not entitled to contract support costs for

administrative expenditures associated with such income; (3) the Tribe is owed

contract support costs only for activities it must undertake under the contract, and the

contract does not require the Tribe to collect third-party revenue; and (4) expenses

generated when spending third-party revenue are not “subject or pursuant to the IHS

contract” under § 5325(a)(3)(A)(i) and (ii), App. 129.

Challenging the first of these conclusions, the Tribe argues that the statute

does not require that an expense under subsection (a)(3)(A) first qualify for

reimbursement under subsection (a)(2). From there, the Tribe rests its statutory

interpretation on subsection (a)(3)(A)’s broad language. It argues that the district

court too narrowly construed the “the contracted federal program.” Aplt. Br. 26.

According to the Tribe, the salient point is that the contract requires the Tribe to

collect third-party revenue, making expenses associated with that process part of “the

operation of the [f]ederal program.” § 5325(a)(3)(A).

12 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 13

In response, the government attempts to dispute the Tribe’s statutory

interpretation and defend the district court’s conclusions. But—perhaps tellingly—it

leads with arguments based on the contract and an IHS manual that it asserts is

relevant here. Despite the government’s implicit invitation to look outside the statute,

the analysis must “begin with [the statute’s] plain text.” Ramah Navajo Chapter, 644

F.3d at 1062.

To start, § 5325(a)(2) explains that when certain conditions are satisfied,

contract support costs “shall be added to the amount required by [subsection (a)(1)].”

Then, § 5325(a)(3)(A) states that “contract support costs that are eligible costs . . .

shall include the costs of reimbursing each tribal contractor for reasonable and

allowable costs of” the “direct program expenses” and “any additional administrative

or other expense incurred.” But the statute does not inform the reader whether, to

qualify as a contract support cost under subsection (a)(3)(A), subsection (a)(2)’s

requirements must be met. Stated differently, nothing in subsection (a)(3)(A)

explains whether that subsection creates additional categories of contract support

costs (on top of those listed in subsection (a)(2)) or whether subsection (a)(3)(A)

instead limits the categories of contract support costs described in subsection (a)(2).

This absence is particularly telling given that Congress has shown in these very

provisions that it knows how to specifically incorporate earlier ones. For instance,

subsection (a)(2) refers back “to the amount required by [subsection (a)(1)],” and

subsection (a)(3)(A)’s final clause likewise references subsection (a)(1). By contrast,

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the disputed provisions of subsection (a)(3)(A) nowhere specifically mention

subsection (a)(2).

Given this lack of clarity, there are at least two ways to interpret the

relationship between the subsections. One way to read these provisions—as the Tribe

asserts—is to understand subsection (a)(3)(A) as a standalone provision that

describes additional categories of contract support costs. On the other hand, the

government echoes the district court’s reading, asserting that § 5325(a)(3)(A)(i) and

(ii) do not create new categories of contract support costs. Rather, according to the

government, both provisions “are limited by the requirements of § 5325(a)(2).”

Aplee. Br. 20. But the government’s one-sentence assertion offers no justification for

concluding that this interpretation is “clearly required by [§ 5325(a)’s] statutory

language.” 6 Salazar, 567 U.S. at 194.

Thus, I would hold that the interplay between subsections (a)(2) and (a)(3)(A)

is ambiguous. 7 See Maralex Res., 913 F.3d at 1201. And in this context, ambiguity is

6 Without elaboration, the government cites Cook Inlet Tribal Council, Inc. v. Dotomain, in which the D.C. Circuit held that § 5325(a)(3)(A) “does not expand the types of contract support costs” available under subsection (a)(2) but rather “divides into two the contract support costs already defined by [subsection] (a)(2).” 10 F.4th 892, 895 (D.C. Cir. 2021). To be sure, that is one possible reading of the statute. But Cook Inlet did not consider whether this aspect of the statute was ambiguous. See id. at 895–96. And the government’s citation to this case, unaccompanied by any argument tethered to the language of the statute, does not establish that Cook Inlet’s interpretation is required by the statutory language. See Salazar, 567 U.S. at 194. 7 Contrary to Judge Eid’s suggestion, I do not reach this conclusion simply because these provisions are “complex” and interpreting them “‘requires a taxing inquiry.’” Op. of Eid, J., 1, 10 (quoting Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019)). I do so because, as explained above, subsections (a)(2) and (a)(3)(A) are

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critical because it triggers the Indian canon of construction. Recall that under this

canon, the Tribe’s proffered interpretation of an ambiguous statute must be accepted

if it is reasonable. See Ramah Navajo Chapter, 644 F.3d at 1057. And the Tribe’s

reading of the statute—that subsection (a)(3)(A) is a standalone provision

recognizing additional categories of contract support costs—is reasonable. That’s in

large part because, as explained earlier, there’s nothing in subsection (a)(3)(A)

directly harkening back to subsection (a)(2), despite other specific cross-references

included in these provisions.

Instead, as the Tribe maintains, subsection (a)(3)(A)’s “eligible costs” are

reasonably read as linked to the two types of reimbursable contract support costs

listed in this provision: (1) “direct program expenses for the operation of the [f]ederal

program that is subject to the contract,” § 5325(a)(3)(A)(i); and (2) “any additional

administrative or other expense . . . and any overhead expense” the Tribe incurs “in

connection with the operation of the [f]ederal program, function, service, or activity

“susceptible to more than one reasonable reading.” Kisor, 139 S. Ct. at 2410; see also Maralex, 913 F.3d at 1201 (“A statute is ‘ambiguous if it is reasonably susceptible to more than one interpretation or capable of being understood in two or more possible senses or ways.’” (quoting Nat’l Credit Union, 764 F.3d at 1226)). Judge Eid persuasively explains, for reasons I largely agree with, why the Tribe’s reading of § 5325(a) is reasonable. But she does not explain why the government’s contrary interpretation of this provision is unreasonable, instead merely declaring that it is. And by neglecting the government’s proffered interpretation of § 5325(a), Judge Eid fails to support her conclusions that “the Tribe presents the only reasonable construction” and that the relevant provisions are therefore not ambiguous. Op. of Eid, J., 1 (emphasis added). This omission is particularly troubling given that the district court concluded that the same statutory language unambiguously favored the government’s interpretation. 15 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 16

pursuant to the contract,” § 5325(a)(3)(A)(ii). This reasonable reading of the relevant

and ambiguous statutory provisions is all that is required for the Tribe’s

interpretation to succeed. See Ramah Navajo Chapter, 644 F.3d at 1057.

And as the Tribe persuasively explains, it prevails under this reasonable

interpretation because its administrative costs associated with generating and then

expending third-party revenue qualify under either subpart of subsection (a)(3)(A).

That is, these costs can be reasonably understood as “direct program expenses for the

operation of the [f]ederal program that is the subject of the contract.”

§ 5325(a)(3)(A)(i). And these costs can also be reasonably understood as “additional

administrative” or “overhead expense[s] incurred by the [Tribe] in connection with

the operation of the [f]ederal program, function, service, or activity pursuant to the

contract.” § 5325(a)(3)(A)(ii).

The contract, which governs the Tribe’s operation of the federal healthcare

program, shows why. The contract unambiguously anticipates that the Tribe will bill

third-party insurers, including Medicare, Medicaid, and private insurers, for

healthcare services it provides. Specifically, the Tribe’s scope-of-work document,

which is incorporated into the contract, states that the Tribe will:

• obtain and maintain “accreditation standards in order to qualify for funds through third[-]party[ ]payers”;

• “[u]se [IHS’s] third-party billing system” until the Tribe is able to “set up its own functioning . . . third-party billing system”;

• coordinate benefits to perform alternate resource determinations;

• ensure necessary certifications are maintained; 16 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 17

• manage claims; and

• conduct “[q]uality assurance and all third-party billing processes.”

App. 105–06. These provisions plainly contemplate that the Tribe will engage in

third-party billing to generate revenue. And importantly, once the Tribe establishes

this infrastructure and collects third-party revenue, the Self-Determination Act

requires the Tribe to deploy its program income “to further the general purposes of

[its] contract” with IHS. § 5325(m)(1). Moreover, § 5325(m)(2) states that “program

income earned by a tribal organization in the course of carrying out a self-

determination contract . . . shall not be a basis for reducing the amount of funds

otherwise obligated to the contract.” That the Tribe must recirculate the third-party

revenue that it earns (minus any administrative cost) further supports its contention

that these administrative costs are “direct program expenses for the operation of the

[f]ederal [healthcare] program” that are “incurred . . . in connection with” the

operation of the federal healthcare program “pursuant to the contract.”

§ 5325(a)(3)(A)(i)–(ii). Indeed, the Ninth Circuit recently reached a similar

conclusion for that very reason. See San Carlos Apache Tribe v. Becerra, 53 F.4th

1236, 1242 (9th Cir. 2022) (holding that costs related to “third-party-revenue-funded

healthcare activities” were performed “‘in connection with’” tribe’s operation of its

program because “the [c]ontract requires the [t]ribe to provide third-party-funded

health[]care” and thus “causes the [t]ribe to carry out those activities” (quoting

§ 5235(a)(3)(A)(ii)).

17 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 18

To evade the conclusion that these expenses satisfy subsection (a)(3)(A), the

government pivots away from the statutory text, arguing instead that the statute only

provides “in general terms the expenses” contract support costs are designed to cover

and that the Tribe is now seeking to recover contract support costs above what it

agreed to in its contract. Aplee. Br. 24. That is, the government contends that even if

subsection (a)(3)(A) authorizes reimbursement for these costs, the parties’ contract

precludes such reimbursement. In support, the government cites an IHS manual

referenced in the annual funding agreement that it contends reflects an already-

negotiated amount of contract support costs. Yet the annual funding agreement—

which again, forms part of the contract—states that the parties’ agreed-upon

calculation of contract support costs is an “estimate” that “shall be recalculated as

necessary . . . to reflect the full [contract support costs] required under [§ 5325] and,

to the extent not inconsistent with the [Self-Determination Act], as specified in [the]

IHS [m]anual.” App. 84 (emphasis added). And that’s the rub. Reimbursement for

these administrative expenditures is required to reflect the full contract support costs

to which the Tribe is entitled under the statute. Thus, the government’s reliance on

the IHS manual and the initially negotiated contract support costs is to no avail. See

San Carlos Apache Tribe, 53 F.4th at 1240 (rejecting similar argument because it

“ignores the flexibility written into the [c]ontract”).

Next, the government points to a separate section of the Self-Determination

Act providing that program income, like the insurance reimbursements obtained by

the Tribe, “shall be treated as supplemental funding to that negotiated in the funding

18 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 19

agreement.” Aplee. Br. 25–26 (quoting 25 U.S.C. § 5388(j)). From there, the

government argues that this income should also be treated as separate from the amount

provided under § 5325(a)(1). The district court similarly concluded that § 5388(j)

demonstrates that program income is “treated as supplemental funding to that negotiated

in the funding agreement.” App. 124 (quoting § 5388(j)). Yet as the government

acknowledges, § 5388(j) applies only to compacts under Title V of the Self-

Determination Act and not, as here, to self-determination contracts under Title I. The

government clarifies that it relies on § 5388(j) to generally “illustrate[] Congress’s

treatment of third-party income.” Aplee. Br. 26 n.9. But § 5388(j) does not squarely

address the pertinent question here: whether the Tribe is entitled to reimbursement, under

§ 5325(a), for administrative costs associated with collecting and expending that third-

party income—actions that the contract clearly anticipates the Tribe will carry out.

The government also argues (as the district court concluded) that the Tribe is

entitled, but not required, to collect income from third parties like Medicare,

Medicaid, and private insurers—and therefore its expenses from collecting and

expending that income are not reimbursable. There are two problems with this

argument. First, as explained, the contract plainly anticipates that the Tribe will set up

and maintain a third-party billing system and will collect reimbursements for patients

with third-party coverage. And more to the point, under the Tribe’s reasonable

interpretation of the statute, it doesn’t matter whether the Tribe is required to collect

income from third parties. The question is whether the Tribe’s administrative

expenditures in doing so count as “direct program expenses,” § 5325(a)(3)(A)(i), or “any

19 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 20

additional administrative or other expense incurred,” § 5325(a)(3)(A)(ii). For the reasons

explained earlier, I would find they do.

Nevertheless, to support a narrower understanding of contract support costs,

the government leans heavily on the D.C. Circuit’s decision in Swinomish Indian

Tribal Community v. Becerra, 993 F.3d 917 (D.C. Cir. 2021). There, the D.C. Circuit

rejected the argument the Tribe posits here, concluding that “‘the [f]ederal program’

does not encompass spending insurance payments” because the statute refers to “‘the

[f]ederal program that is the subject of the contract’ and ‘the [f]ederal program,

function, service, or activity pursuant to the contract.’” Id. at 921 (quoting

§ 5325(a)(3)(A)(i)–(ii)). Indeed, Swinomish interpreted the statutory provisions in

§ 5325(a)—like the district court did here—as limited to activities that “‘ensure

compliance with the terms of the contract’ conducted by the tribe ‘as a contractor.’”

Id. at 920 (emphasis omitted) (quoting § 5325(a)(2)). In other words, Swinomish

understood the statute to limit contract support costs exclusively to funds provided by

IHS. See id.

But § 5325(a)’s expansive language does not support Swinomish’s narrow

reading, as the Ninth Circuit persuasively outlined in San Carlos Apache Tribe, 53

F.4th 1236. 8 For one thing, the phrase “the [f]ederal program” is most naturally read

8 In so doing, the Ninth Circuit relied on the Indian canon after concluding that the statutory language underlying Swinomish’s interpretation is at least ambiguous. See San Carlos Apache Tribe, 53 F.4th at 1242–43. As discussed in the paragraph above, I do not find such language ambiguous. But even if I did, the canon would require that I resolve such ambiguity in the Tribe’s favor, as the Ninth Circuit did. See id.; Ramah Navajo Chapter, 644 F.3d at 1057. 20 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 21

as referring to “all activities required by the [c]ontract, regardless of funding source,”

which “encompass[es] those portions of the Tribe’s healthcare program funded by

third-party revenue.” San Carlos Apache Tribe, 53 F.4th at 1242. And even if there

were no way to read that phrase to include those third-party funds, such conclusion

would not end the analysis because the statute “does not limit [contract support costs]

to ‘the [f]ederal program’” itself. Id. at 1243. Instead, it limits them to costs

“incurred by the [Tribe] in connection with the operation of” that program,

§ 5325(a)(3)(A)(ii) (emphasis added); it therefore “contemplates that there are at

least some costs outside of the [f]ederal program itself that require [contract support

costs],” San Carlos Apache Tribe, 53 F.4th at 1243. And as already explained, the

costs at issue satisfy that broad limit: The Tribe seeks reimbursement for

administrative costs associated with services it provided pursuant to its self-

determination contract with IHS, services it could not have provided without that

contract. 9 See id. at 1241–42. So contrary to Swinomish’s view, the Self-

Determination Act entitles the Tribe to reimbursement for those administrative costs.

Moreover, the statute’s legislative purpose and history align with the Tribe’s

interpretation of subsection (a)(3)(A). See Scheidler v. Nat’l Org. for Women, Inc.,

547 U.S. 9, 19–20 (2006) (examining legislative history to support statutory

interpretation); Medina v. Cath. Health Initiatives, 877 F.3d 1213, 1226 (10th Cir.

2017) (“A textually permissible interpretation that furthers rather than obstructs the

9 For this reason, Swinomish’s concern that IHS could be “on the line for unlimited contract support costs” is misplaced. 993 F.3d at 921. 21 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 22

[statute’s] purpose should be favored.” (quoting Antonin Scalia & Bryan A. Garner,

Reading Law: The Interpretation of Legal Texts 63 (2012))). In 1994, Congress

added subsections (a)(3)(A)(i) and (ii) to “assure that there is no diminution in

program resources when programs, services, functions[,] or activities are transferred

to tribal operation.” S. Rep. No. 103-374, at 9 (1994). And as the legislative history

shows, without these amendments, a tribe would be compelled to “divert program

funds to prudently manage the contract, a result Congress has consistently sought to

avoid.” Id. That is what would happen (and indeed, if the Tribe’s allegations are

correct, what has been happening) were the Tribe required to use the third-party

income it collects to cover the administrative costs associated with generating and

then expending revenue from third-party insurers. See id.; § 5302(a) (emphasizing

government’s obligation to “assur[e] maximum Indian participation in the direction

of . . . [f]ederal services to Indian communities”); Ramah Navajo Chapter, 644 F.3d

at 1058 (explaining that self-determination contracts “transfer responsibility for

various programs from federal agencies to the tribes themselves, while maintaining

federal funding of the programs”).

In this regard, the district court’s decision in Navajo Health Foundation-Sage

Memorial Hospital, Inc. v. Burwell, 263 F. Supp. 3d 1083 (D.N.M. 2016), is

persuasive. There, the court granted summary judgment on this issue to a tribal

organization that had entered into a self-determination contract with IHS. 263 F.

Supp. 3d at 1085–86. It considered a contract that, like the one in this case, expressly

provided for “billing and collecting third[-]party reimbursements.” Id. at 1165. After

22 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 23

engaging in a lengthy review of the Self-Determination Act’s legislative purpose and

history, the court concluded that the Self-Determination Act had been amended to

“give greater assurances that IHS would cover [t]ribes’ full amount of [contract

support costs].” Id. at 1168; see also id. at 1167 (“The legislative history of the [Self-

Determination Act’s] 1988 amendments, which first defined the term ‘contract

support costs,’ shows that Congress was determined to counter IHS[’s] persistent

failure to provide full funding for the indirect costs associated with self-

determination contracts.”).

From there, the court considered the question at issue here: “whether funding

that third parties such as Medicare, Medicaid, and private insurers provide is

considered part of federal programming for the purposes of reimbursement under the

[Self-Determination Act].” Id. at 1164. Looking to the Tribe’s annual funding

agreement with the government, the court answered in the affirmative, explaining

that each of those third-party payers “provides funding for . . . American Indian

healthcare services.” 10 Id. at 1165.

Consistent with Burwell, I read § 5325(a)(3)(A)’s broad language to mandate

reimbursement for “direct program expenses for the operation of the [f]ederal

program that is the subject of the contract,” § 5325(a)(3)(A)(i), as well as “any

additional administrative or other expense incurred by the . . . Tribal organization and

10 To solidify its conclusion, the district court in Burwell applied the Indian canon of construction, noting that the canon provided “further reason” to interpret the statutory term “‘federal program[]’ broadly and in [the Tribe’s] favor.” 263 F. Supp. 3d at 1165 (quoting § 5325(a)(3)(A)). 23 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 24

any overhead expense incurred by the tribal contractor in connection with the

operation of the [f]ederal program, function, service, or activity pursuant to the

contract,” § 5325(a)(3)(A)(ii). Thus, the Tribe’s expenses count as contract support

costs under either of those provisions, and the Tribe is entitled to reimbursement for

the administrative expenditures related to collecting and expending third-party

revenue that it generated by billing third parties.

B. 25 U.S.C. § 5326

Seeking an escape hatch, the government points to 25 U.S.C. § 5326. That

statute provides:

Before, on, and after October 21, 1998, and notwithstanding any other provision of law, funds available to the [IHS] in this Act or any other Act for Indian self-determination or self-governance contract or grant support costs may be expended only for costs directly attributable to contracts, grants[,] and compacts pursuant to the Indian Self- Determination Act and no funds appropriated by this or any other Act shall be available for any contract support costs or indirect costs associated with any contract, grant, cooperative agreement, self- governance compact, or funding agreement entered into between an Indian tribe or tribal organization and any entity other than the [IHS].

§ 5326. The government argues that under this statutory provision, IHS is not

required to cover “‘indirect costs associated with’ funding received from third

parties, as opposed to costs ‘directly attributable’ to the [self-determination]

contract.” 11 Aplee. Br. 34 (quoting § 5326). In its dismissal order, the district court

similarly concluded that § 5326 barred the Tribe’s claim for contract support costs

11 The government criticizes Burwell because it did not address § 5326. But that is likely because the government defendants there did not make an argument under that provision in response to the plaintiff’s summary-judgment motion. 24 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 25

because the Tribe’s claimed administrative “costs” are not “‘directly attributable’ to

the Tribe’s” contract with IHS. App. 127 (quoting § 5326).

In my view, the government’s argument and the district court’s corresponding

interpretation are mistaken. The district court imported its earlier premise—flawed,

for the reasons noted above—that the only reimbursable costs were those incurred “to

administer the resources and programs provided by IHS.” Id. In the context of

§ 5326, the district court concluded, the expenditures for which the Tribe seeks

reimbursement were “associated with agreements [it had] with Medicare, Medicaid[,]

and other third-party payers” and not with the Tribe’s agreement with IHS. Id.

The parties offer competing interpretations about how close the connection

must be for a cost to be “directly attributable” to a self-determination contract rather

than an “indirect cost[] associated with” some other contract. § 5326. The

government contends that a cost cannot be directly attributable to the contract if the

cost is indirect—as here, if the funding flows from an arrangement between the Tribe

and third parties. The Tribe, to support its interpretation, points out that the contract

with IHS is what triggers the availability of the funding in the first place.

Once again, because the Tribe’s interpretation is reasonable, the Indian canon

compels its adoption. See Ramah Navajo Chapter, 644 F.3d at 1057. Indeed, the

Tribe’s contract with IHS mandates that the Tribe implement and maintain a third-

party billing system to collect reimbursements for patients with third-party insurance

coverage. And once this program income has been collected, the Tribe is statutorily

required to expend it to further the healthcare program. See § 5325(m)(1). Therefore,

25 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 26

I would conclude that the costs associated with collecting and expending this

program income are “directly attributable to” the Tribe’s contract with IHS, not

“associated with” non-IHS agreements. 12 § 5326; see also San Carlos Apache Tribe,

53 F.4th at 1244 (finding § 5326 ambiguous on whether tribe’s spending of third-

party revenue is “‘directly attributable’ to the [c]ontract”).

Conclusion

Applying the Indian canon of construction, I would adopt the Tribe’s

reasonable interpretation to resolve the ambiguous relationship between § 5325(a)(2)

and § 5325(a)(3)(A). Under that interpretation, the contract support costs sought by

the Tribe—administrative expenses incurred in connection with the Tribe’s

contractually anticipated collection and expenditure of third-party income—are direct

12 Unlike my colleagues, I do not read § 5326 as stating “two [independent] restrictions on the funds a tribe can receive.” Dissent 2; see also Op. of Eid, J., 6. That is, I do not read the statute as both (1) requiring that costs be “directly attributable to” the Tribe’s contract with IHS and (2) precluding reimbursement for “indirect costs associated with” non-IHS contracts. § 5326. Instead, like the parties, I read § 5326 as stating two different sides of the same limitation: On one side, “funds available to” IHS “may be expended only for costs directly attributable to” self- determination contracts; on the other, “no funds appropriated by” IHS to tribes “shall be available for any . . . indirect costs associated with any [non-IHS] contract.” Id. (emphases added). Contrary to Judge Baldock’s view, the fact that Congress linked these two inverse clauses with the word “and” does not automatically convert them into independent requirements. See Confederated Tribes & Bands of Yakama Nation v. Yakima Cnty., 963 F.3d 982, 990 (9th Cir. 2020) (“[J]ust because the ordinary meaning of ‘and’ is typically conjunctive does not mean ‘and’ cannot take on other meanings in context.”). And at the very least, § 5326 does not unambiguously support such a reading. So under the Indian canon, the Tribe’s reasonable interpretation—that costs “directly attributable” to an IHS contract are necessarily not “associated with” a non-IHS contract (and vice versa)—must be accepted. § 5326; see also Ramah Navajo Chapter, 644 F.3d at 1057. 26 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 27

expenses incurred while operating the healthcare program that is the subject of its

contract with IHS. See § 5325(a)(3)(A)(i). These expenses are also incurred “in

connection with the operation of the [f]ederal program” that it contracted to run.

§ 5325(a)(3)(A)(ii). Again applying the Indian canon, I would reject the

government’s contention that § 5326 bars the Tribe’s claim for contract support costs

because, contrary to the government’s contention, the Tribe’s costs are directly

attributable to the contract. With Judge Eid’s separate opinion and this opinion, a

majority of this panel reverses and remands to the district court for further

proceedings.

27 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 28

No. 21-8046, Northern Arapaho Tribe v. Becerra

EID, Circuit Judge, concurring in the judgment.

I agree with Judge Moritz that the statutory scheme in question supports the

Tribe’s position, but I reach that result by taking a different path. Judge Moritz finds

that both the Tribe and the government put forth reasonable interpretations of the

statutory language and then employs the Indian canon of statutory construction to

break the tie in favor of the Tribe. See Moritz op. at 2–3. The statutory scheme here

is undoubtedly complex and requires a good deal of analysis, but that does not mean

that it is ambiguous. In my view, the Tribe presents the only reasonable construction

because the government’s interpretation vitiates much of the statutory scheme.

Accordingly, I respectfully concur only in the judgment.

The Indian Self-Determination and Education Assistance Act (“ISDEAA”)

provides that when a tribe contracts with the federal government to provide its own

services—like healthcare—the tribe receives whatever funds the government would

have spent to run the program had it provided those services directly. This is called

the “[s]ecretarial amount.” Aplt. Br. at 5; Aple. Br. at 4. But a tribe faces additional

costs that the federal government need not incur to operate the same system,

including, for example, the costs of audits, workers’ compensation insurance (which

often involves paying into state-run programs), and taxes. The ISDEAA adds

“contract support costs” to the secretarial amount to cover these items. 25 U.S.C.

1 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 29

The statute broadly defines “contract support costs.” See id. § 5325(a)(2)–(3).

Contract support costs “shall consist of an amount for the reasonable costs for

activities [that] must be carried on by a tribal organization as a contractor to ensure

compliance with the terms of the contract and prudent management” but that (A) the

federal government does not normally incur when directly operating the program or

(B) the relevant agency provides “in support of the contracted program from

resources other than those under contract.” Id. § 5325(a)(2). Moreover, “[t]he

contract support costs that are eligible costs for the purposes of receiving funding

under this chapter shall include the costs of reimbursing each tribal contractor for

reasonable and allowable costs of” (i) “direct program expenses for the operation of

the Federal program that is the subject of the contract” and (ii) “any additional

administrative or other expense incurred by the governing body of the Indian Tribe or

Tribal organization and any overhead expense incurred by the tribal contractor in

connection with the operation of the Federal program, function, service, or activity

pursuant to the contract.” Id. § 5325(a)(3)(A). The statute states that contract

support cost funding “shall not duplicate any funding provided under

subsection (a)(1),” which provides for the secretarial amount. Id.; see also id.

§ 5325(a)(1).

In other words, the statute provides that “[t]he contract support costs that are

eligible costs for the purposes of receiving funding under this chapter shall include

the costs of reimbursing each tribal contractor for reasonable and allowable costs of”

both (i) “direct program expenses” and (ii) “any additional administrative or other

2 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 30

expense” that the tribe incurs and “any overhead expense” that “the tribal contractor

[incurs] in connection with the operation of the Federal program, function, service, or

activity pursuant to the contract.” Id. § 5325(a)(3)(A). “[C]ontract support costs” is

thus a very broad term. Id.

A tribe’s funding arrangement is complicated by the complexities of the

modern healthcare system. The federal government’s Indian Health Service (“IHS”)

does not fund a contracting tribe’s healthcare system in a vacuum. Healthcare is

increasingly funded by reimbursements from non-tribe, non-IHS, third-party payors

such as Medicare, Medicaid, and private insurers. 1 These revenues are called

“program income,” 25 U.S.C. § 5325(m), and they reimburse a provider’s direct

expenses.

Notably, by statute, the amount IHS must pay a tribe because of the contract is

not reduced when a tribe collects program income. See id. § 5325(m)(2). The statute

explicitly provides that “program income earned by a tribal organization in the course

of carrying out a self-determination contract . . . shall not be a basis for reducing the

amount of funds otherwise obligated to the contract.” Id. § 5325(m). Funds

authorized by law and directly provided for in the contract are clearly “obligated to

the contract.” Id. § 5325(m)(2). Likewise, because contract support costs stem from

activities that a tribe must undertake “to ensure compliance with the terms of the

1 See Medicaid & CHIP Payment & Access Comm’n, Medicaid’s Role in Health Care for American Indians and Alaska Natives 5–6 (2021), https://www.macpac.gov/wp- content/uploads/2021/02/Medicaids-Role-in-Health-Care-for-American-Indians-and- Alaska-Natives.pdf. 3 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 31

contract and prudent management” and because the statute requires that contract

support costs be paid because of the IHS contract, id. § 5325(a)(2), they are “funds []

obligated to the contract.” Id. § 5325(m)(2). Therefore, the secretarial amount and

the amount of reimbursement for contract support costs that are authorized and

required by the contract and by statute may not be reduced because of program

income. See id.; see also id. § 5388(j) (stating that “[a]ll Medicare, Medicaid, or

other program income earned by an Indian tribe shall be treated as supplemental

funding to that negotiated in the funding agreement” and “shall not result in any

offset or reduction in the amount of funds the Indian tribe is authorized to receive

under its funding agreement . . .”).

A tribe with an ISDEAA contract will already be fully reimbursed through the

secretarial amount and contract support costs; and, therefore, program income is

extra money on top of basic reimbursement. However, a tribe does not simply

receive a windfall. The statute provides that “program income . . . shall be used by

the tribal organization to further the general purposes of the contract.” Id.

§ 5325(m). That is, the statutory text contemplates this additional money and

requires the tribe to inject it back into its healthcare program.

The Northern Arapaho Tribe contracts with the federal government to provide

healthcare on the reservation that the government would otherwise be obligated to

provide. IHS refused to provide the Tribe with contract support costs corresponding

to the portion of its healthcare system funded with program income. The issue here

4 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 32

is whether tribes are owed “contract support costs” on the program income that they

receive and then spend on more programming.

As laid out above, the term “contract support costs” has a broad meaning.

Additionally, the government cannot pay less because of program income, which the

statute requires to be injected back into the Tribe’s program and which itself only

exists because of the IHS contract. See id. § 5325. Also, the Tribe’s contract—the

relevant provisions of which Judge Moritz lays out, see Moritz op. at 16–17 (quoting

App’x at 105–06)—“plainly contemplate[s] that the Tribe will engage in third-party

billing to generate revenue,” id. at 17. Based on the plain meaning of both the

contract and § 5325, the Tribe must be reimbursed for these contract support costs.

As Judge Moritz points out, see id. at 24–26, it is true that § 5326 of the statute

provides limits on recovering contract support costs, see 25 U.S.C. § 5326. 2 And

these limits exist “notwithstanding any other provision of law.” Id. While Judge

Moritz focuses largely on the first portion of § 5326, see Moritz op. at 24–26, I do

2 That provision states in full:

Before, on, and after October 21, 1998, and notwithstanding any other provision of law, funds available to the Indian Health Service in this Act or any other Act for Indian self-determination or self-governance contract or grant support costs may be expended only for costs directly attributable to contracts, grants and compacts pursuant to the Indian Self-Determination Act and no funds appropriated by this or any other Act shall be available for any contract support costs or indirect costs associated with any contract, grant, cooperative agreement, self-governance compact, or funding agreement entered into between an Indian tribe or tribal organization and any entity other than the Indian Health Service.

25 U.S.C. § 5326. 5 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 33

not read § 5326 as establishing two mutually exclusive conditions—where, for

example, the cost being “directly attributable” to the IHS contract automatically

makes the cost not be “associated with” a non-IHS contract, see Aple. Br. at 34. I

instead read § 5326 to contain two similar statutory conditions that must both be met.

First, § 5326 limits contract support cost recovery to “costs directly

attributable to contracts, grants and compacts pursuant to the Indian Self-

Determination Act.” 25 U.S.C. § 5326 (emphasis added). The costs incurred when

spending program income are “directly attributable” to the Tribe’s self-determination

contract. Because of the contract, the Tribe takes control of its healthcare services

and is required to spend the program income it has accepted as a “prudent” provider

on more healthcare services. Id. § 5325(a)(2); see also id. § 5325(m)(1). The

contract—which incorporates the statute—thus contemplates and requires spending

program income “to further the general purposes of the contract.” Id. § 5325(m)(1).

The contract support costs associated with the required spending of program

income—including costs associated with collecting and spending program income—

are, therefore, “directly attributable” to the contract. To hold otherwise would be to

hold that costs contemplated by the contract and required by the statute are not

directly attributable to the contract. In sum, such a contradictory interpretation—one

that is adopted by the government, see Aple. Br. at 34–35—would ignore the

mandatory aspect of the spending.

Second, § 5326 prohibits the government from paying “for any contract

support costs or indirect costs associated with any contract, grant, cooperative

6 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 34

agreement, self-governance compact, or funding agreement entered into between an

Indian tribe or tribal organization and any entity other than the Indian Health

Service.” 25 U.S.C. § 5326 (emphasis added). The costs incurred when collecting

and spending program income are not “associated with” non-IHS agreements, at least

under any interpretation of the statute that does not destroy it entirely. Contracting is

ubiquitous. As one court has observed, the “literal requirement that no funds from

any appropriation whatever, including other agency appropriations, may ever be used

to pay costs ‘associated with’ other agencies would . . . eliminat[e] the possibility of

funding any indirect costs at all.” Tunica-Biloxi Tribe of La. v. United States, 577 F.

Supp. 2d 382, 417 (D.D.C. 2008). Likewise, a broad reading of this phrase would

vitiate most, if not all, of the ISDEAA’s explicit contract support costs funding. One

can easily imagine many non-IHS agreements that would be “associated with”

traditional contract support costs incurred by contracting tribes under the broad

reading of the phrase. Under this reading, the contract support costs incurred when a

tribe conducts federally required audits might be said to be “associated with” the

tribe’s contract hiring an auditor. Additionally, under the expansive reading

proposed by the government, this could also be said about the tribe’s contracts with

insurers involved in obtaining and paying for workers’ compensation insurance—

which often involves paying into state-run programs. Moreover, the contract support

costs incurred when a tribe computes its tax obligations might be said to be

“associated with” the tribe’s agreement with its accounting firm under the

government’s reading. Adopting such an expansive reading of the “associated with”

7 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 35

language would foreclose recovery of all of these costs. But that would eliminate the

meaning of much of § 5325; and, therefore, the interpretation must be rejected as

unreasonable. Cf. Standing Akimbo, Inc. v. United States, No. 21-1379, 2023 WL

569405, at *5 n.5 (10th Cir. Jan. 27, 2023) (unpublished) (noting that the court would

“not extend the Anti-Injunction Act to summons proceedings . . . because such an

extension would directly conflict with (and possibly moot) the statutory scheme

entitling taxpayers to challenge summonses in the district court”).

The dissent agrees that the language of § 5325 unambiguously entitles the

Tribe to the funds it seeks. See diss. op. at 2. But then it concludes that § 5326

unambiguously takes those funds away. See id. at 4. I disagree with this analysis.

In the dissent’s view, the “notwithstanding” clause of § 5326, which imposes

the two requirements of the section “notwithstanding any other provision of law,”

impliedly repeals the language of § 5325. It then concludes that § 5326, when

considered in isolation, disallows the funds at issue in this case. But the

“notwithstanding” clause does not come into play unless there is a conflict between

the two provisions in question in the first place. See Cisneros v. Alpine Ridge Grp.,

508 U.S. 10, 18 (1993) (citing Shomberg v. United States, 348 U.S. 540, 547–48

(1995)) (“As we have noted previously in construing statutes, the use of such a

‘notwithstanding’ clause clearly signals the drafter’s intention that the provisions of

the ‘notwithstanding’ section override conflicting provisions of any other section.”

(emphasis added)). Here, there is no conflict.

8 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 36

Contract support costs incurred when collecting and spending program income

are both “directly attributable” to the IHS contract and “associated with” the IHS

contract—not contracts with other entities—for purposes of § 5326. 25 U.S.C.

§ 5326; see also San Carlos Apache Tribe v. Becerra, 53 F.4th 1236, 1244 (9th Cir.

2022) (“This spending occurs only because the Contract allows the Tribe to recover

the insurance money and requires the Tribe to spend it.”). Any contractual

arrangements the Tribe may have with third parties that facilitate receiving program

income are subordinate to the agreement with IHS to expend all program income “to

further the general purposes of the [IHS] contract.” 25 U.S.C. § 5325(m)(1). The

program income is earned by operating the funded activities pursuant to the self-

determination contract, not from unrelated activities. Also, the relevant costs for

reimbursement purposes are incurred in connection with spending program income

on more healthcare activities (as the self-determination contract and the ISDEAA

require), not in connection with any contractual obligations to third parties. See San

Carlos Apache Tribe, 53 F.4th at 1241–43. The connection to third parties is thus

highly attenuated.

In sum, I reject the government’s position not because it reaches an absurd

result, see diss. op. at 4, but because we should not read § 5326 as vitiating the text

of § 5325 when we can give effect to both sections without straining the text.

In the end, there is no question that the statutory scheme and its intersection

with the contract in place in this case is complex. However, “[a] regulation is not

ambiguous merely because ‘discerning the only possible interpretation requires a

9 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 37

taxing inquiry.’” Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019) (quoting Pauley v.

BethEnergy Mines, Inc., 501 U.S. 680, 707 (1991) (Scalia, J., dissenting)). The same

holds true for statutes. These statutes are not ambiguous. Here, I would find that the

Tribe presents the only reasonable construction of the statutory scheme because the

government’s view vitiates much of the scheme without a conflict sufficient to

invoke the “notwithstanding” clause and, therefore, must be rejected. Accordingly, I

concur only in Judge Moritz’s judgment.

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BALDOCK, Circuit Judge, dissenting in part.

Let me begin by acknowledging the complexity of the statutory scheme we consider

today. My colleagues and I cannot reach a consensus on its meaning. This fact alone

speaks volumes about Congress’s ability to draft a coherent statute. But we do not make

the law. We can only interpret and apply it to the best of our ability in the cases that come

before us, and that is what we have done here.

In this case, we are asked to determine whether the Northern Arapaho Tribe is

entitled to additional “contract support costs” to cover the administration of “program

income”—funds received from third-party payors—under the terms of the Indian Self-

Determination and Education Assistance Act (“ISDEAA”). To answer that question, we

consider two provisions from the ISDEAA: 25 U.S.C. § 5325 and 25 U.S.C. § 5326.

According to Judge Moritz, the language of these provisions is ambiguous, meaning that

the Tribe prevails through the Indian canon of construction. Judge Eid agrees that the Tribe

prevails but offers the view that the statutory language is unambiguous, and that the Tribe

wins under its plain language. I agree with Judge Eid that § 5325 is unambiguous and that

under its terms, the Tribe wins. That, however, is not the end of the story. Section 5325

is limited by § 5326. I cannot join the interpretation of § 5326 offered by either of my

colleagues. Its language is unambiguous, and the Tribe cannot receive the funds it seeks

when § 5326 is applied as written. I therefore respectfully dissent.

1 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 39

We face two questions of statutory interpretation in this case. First, we must ask

whether the Tribe is entitled to receive the funds it seeks under § 5325. The Panel’s

unanimous answer to that question is “yes.” As Judge Eid explains in her concurrence, the

statute unambiguously provides that “contract support costs” include “both (i) ‘direct

program expenses’ and (ii) ‘any additional administrative or other expense’ that the tribe

incurs and ‘any overhead expense’ that ‘the tribal contractor [incurs] in connection with

the operation of the Federal program, function, service, or activity pursuant to the

contract.’” Concurrence 2 (quoting § 5325(a)(3)(A)). Based on the plain language of this

provision, and the other relevant provisions of § 5325, I have little difficulty concluding

that the Tribe is entitled to the funds it seeks under that section, at least when it is

considered in a vacuum.

I similarly believe the language of § 5326 is unambiguous. Section 5326 provides:

Before, on, and after October 21, 1998, and notwithstanding any other provision of law, funds available to the Indian Health Service in this Act or any other Act for Indian self-determination or self-governance contract or grant support costs may be expended only for costs directly attributable to contracts, grants and compacts pursuant to the Indian Self-Determination Act and no funds appropriated by this or any other Act shall be available for any contract support costs or indirect costs associated with any contract, grant, cooperative agreement, self-governance compact, or funding agreement entered into between an Indian tribe or tribal organization and any entity other than the Indian Health Service.

Thus, this provision imposes two restrictions on the funds a tribe can receive. First, the

costs must be “directly attributable” to the Tribe’s contract with IHS for it to receive

reimbursement. Second, the costs cannot be “associated with any contract . . . entered into

2 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 40

between an Indian tribe . . . and any entity other than the Indian Health Service.” 1 § 5326.

These limitations apply “notwithstanding any other provision of law” and expressly

constrain the funds available under the ISDEAA “or any other Act.” Id. Because the two

requirements are joined conjunctively, both conditions must be satisfied to comply with

the statute. See, e.g., United States v. Fredette, 315 F.3d 1235, 1244 (10th Cir. 2003);

United States v. Browning, 252 F.3d 1153, 1160 (10th Cir. 2001).

Even assuming for the sake of argument that the Tribe can pass the “directly

attributable” prong by showing that its contract with IHS “contemplate[s]” the Tribe doing

business with third-party payors, see Slip Op. 16–17, 24–26; Concurrence 5–6, I struggle

to see how the Tribe can get past the “associated with” prong. To be sure, the first prong

requires a tight nexus between the costs at issue and the Tribe’s contract with IHS to be

reimbursable while the second prong only requires a loose nexus between the costs and a

contract with a third-party for the same costs to be excluded from reimbursement. And

Judge Eid may be right that this provision could exclude a variety of other contract support

costs and indirect costs. See Concurrence 7–8. But that is what § 5326 says. Although we

abide by the principle that if “a plain language interpretation of a statute would lead to an

absurd outcome which Congress clearly could not have intended, we employ the absurdity

exception to avoid the absurd result,” this is not one of the occasions when the result is one

1 According to a recent Ninth Circuit decision, § 5326 poses no obstacle to the Tribe’s recovery. See San Carlos Apache Tribe v. Becerra, 53 F.4th 1236, 1243–44 (9th Cir. 2022). But the Ninth Circuit’s brief analysis only addressed the “directly attributable” prong and its conclusory statement that it is “not clear that [§ 5326] unambiguously means that this spending is not ‘directly attributable’ to the Contract” does not persuade me to change my view of the statute. Id. at 1244. 3 Appellate Case: 21-8046 Document: 010110821840 Date Filed: 03/06/2023 Page: 41

that Congress did not intend. In re McGough, 737 F.3d 1268, 1276 (10th Cir. 2013) (citing

Resolution Trust Corp. v. Westgate Partners Ltd., 937 F.2d 526, 529 (10th Cir. 1991)).

After all, Congress expressly employed language stating that the rules enunciated in § 5326

trump those in other provisions of the statute. Accordingly, I would read § 5326 as a

superseding provision that bars the Tribe from receiving the funds it seeks even though

§ 5325 would otherwise allow it.

My colleagues, however, do not share this view. Instead, they have each worked

hard to read § 5326 as saying something other than what it says. 2 But as I have discussed,

§ 5326’s language is plain and unambiguous. If § 5326 does not bar the Tribe from

receiving the costs in question, I struggle to see when it would apply or what purpose it

would serve. Congress chose to draft a clear and broadly applicable statute. In my view,

the Tribe’s issue with § 5326 is better addressed by Congress than by us. I respectfully

dissent.

2 Judge Eid cites our recent decisions, Standing Akimbo, Inc. v. United States, No. 21-1379, 2023 WL 569405 at *5 n.5 (10th Cir. Jan. 27, 2023) (unpublished), to support her view that my reading of § 5326 “would eliminate the meaning of much of § 5325” and “must be rejected as unreasonable.” Concurrence 8. Specifically, Judge Eid highlights our rejection of the IRS’s argument that the Anti-Injunction Act barred us from exercising jurisdiction in that case. Id. But that discussion is an inapposite comparison with this case. In Standing Akimbo, we concluded the Anti-Injunction Act did not apply because the Taxpayers did not seek an injunction. 2023 WL 569405 at *5 n.5. We also explained that expanding the Anti-Injunction Act to cover summons proceedings would undermine a separate statutory scheme granting taxpayers the right to challenge third-party summons issued by the IRS. See id. In contrast, this case involves two provisions of the same statutory scheme. Furthermore, even if Standing Akimbo was directly on point (which it is not), it is unpublished authority. And the unpublished decisions of this Court are merely persuasive. 4