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Lummi Tribe of the Lummi Reservation, Washington v. United States

United States Court of Appeals, Federal Circuit

September 12, 2017


         Appeal from the United States Court of Federal Claims in No. 1:08-cv-00848-EGB, Senior Judge Eric G. Bruggink.

          John Fredericks, III, Fredericks Peebles & Morgan, LLP, Mandan, ND, argued for plaintiffs-appellees. Also represented by Jeffrey S. Rasmussen, Louisville, CO.

          Steven J. Gillingham, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellant. Also represented by David Alan Levitt, Robert E. Kirschman, Jr., Benjamin C. Mizer; Gary Alan Nemec, David A. Sahli, Perrin Wright, United States Department of Housing and Urban Development, Washington, DC.

          Before Prost, Chief Judge, O'Malley, and Chen, Circuit Judges.

          O'Malley, Circuit Judge.

         The government seeks review of a September 30, 2015 order of the Court of Federal Claims (the "Claims Court"). See Order, Lummi Tribe of the Lummi Reservation v. United States, No. 08-848C (Fed. Cl. Sept. 30, 2015), ECF No. 121. In that order, the Claims Court reaffirmed its prior ruling that the Native American Housing Assistance and Self-Determination Act of 1996 ("NAHASDA") is money mandating, giving the Claims Court jurisdiction over appellees' claims. Id. On June 9, 2016, this court granted the government's petition for interlocutory appeal to "ensure that the Court of Federal Claims is the court of proper jurisdiction before requiring it and the parties to undergo extensive unnecessary proceedings." Order at 3, Lummi Tribe of the Lummi Reservation v. United States, No. 2016-124 (Fed. Cir. June 9, 2016), ECF No. 1-2. For the following reasons, we vacate and instruct the Claims Court to dismiss this action for lack of subject-matter jurisdiction.


         Congress enacted NAHASDA, 25 U.S.C. §§ 4101- 4243, to fulfill the federal government's responsibility to Indian tribes and their members "to improve their housing conditions and socioeconomic status so that they are able to take greater responsibility for their own economic condition." Id. § 4101(4). In particular, NAHASDA established an annual block grant system, whereby Indian tribes receive direct funding in order to provide affordable housing to their members. The relevant sections of NAHASDA require HUD to make grants according to a regulatory formula based on several factors, including: (1) "[t]he number of low-income housing dwelling units . . . owned or operated" by the tribes on NAHASDA's effective date; (2) the number of Indian families and extent of poverty and economic distress within a tribe's area; and (3) "[o]ther objectively measurable conditions as [HUD] and the Indian tribes may specify." Id. § 4152(b)(1)-(3).

         The dwelling units described in factor (1) are called Formula Current Assisted Stock ("FCAS"). Each eligible dwelling unit in a tribe's FCAS is entitled to a sum certain amount of funding each year based upon a calculated operating subsidy and modernization allocation. HUD regulations establish which units initially count as FCAS in the formula, and when those units no longer qualify (e.g., when they have been or could have been conveyed to homebuyers). 24 C.F.R. §§ 1000.312, 1000.314, 1000.318. Once awarded these subsidies, grantee tribes are limited in how and when they may dispense the funds, which can be used only on statutorily specified activities in accordance with program requirements. See, e.g., 25 U.S.C. § 4139; 2 C.F.R. § 200.313-314.

         In the event of a grantee's failure to comply substantially with NAHASDA, HUD can recapture grant funds by: "(A) terminat[ing] payments under this [Act] to the recipient; (B) reduc[ing] payments [by the amount not expended in compliance with the Act]; (C) limit[ing] the availability of payments [to compliant activities]; or (D) . . . provid[ing] a replacement tribally designated housing entity for the recipient." 25 U.S.C. § 4161(a)(1).

         Appellees are an Indian tribe and three tribal housing entities (collectively, "the Tribes") who qualified for and received NAHASDA block grants. Lummi Tribe of the Lummi Reservation v. United States, 99 Fed.Cl. 584, 588 (2011) ("Lummi I"). In 2001, a HUD Inspector General report concluded that, since the enactment of NAHASDA, HUD had improperly allocated funds to the Tribes because the formula that HUD applied had included housing that did not qualify as FCAS. Id. HUD informed the Tribes of the amount overfunded, the regulations on which HUD based its decision, and the housing units that HUD found ineligible. Id. at 599. HUD also provided the Tribes with the opportunity to dispute HUD's findings regarding FCAS unit eligibility or appeal the determinations of overfunding. Id. Thereafter, HUD eliminated the ineligible units from the FCAS data and recouped the excess funding by deducting the amount overfunded from subsequent grant allocations-$863, 236 from Lummi, $249, 689 from Fort Berthold, and $964, 699 from Hopi. Lummi Tribe of the Lummi Reservation v. United States, 106 Fed.Cl. 623, 625 (2011) ("Lummi II").

         The Tribes brought suit in the Claims Court under the Tucker Act and the Indian Tucker Act, 28 U.S.C. §§ 1491(a)(1) and 1505, respectively, alleging that HUD improperly deprived them of grant funds to which they were entitled. In relevant part, the Tribes alleged that: (1) HUD misapplied the NAHASDA formula by inappropriately removing housing units from the FCAS data, which led to decreased grant amounts; and (2) HUD was obligated by 25 U.S.C. § 4165 to provide the Tribes with a hearing during which they could respond to the HUD report, but HUD failed to do so. Lummi I, 99 Fed.Cl. at 591; see generally 25 U.S.C. § 4165 ("The Secretary shall provide each recipient that is the subject of a report made by the Secretary . . . . notice that the recipient may review and comment on the report during a period of not less than 30 days . . . .").

         The government moved to dismiss the claims for lack of jurisdiction, arguing in particular that NAHASDA's provision for block grants is not money mandating. Lummi I, 99 Fed.Cl. at 591. The Claims Court disagreed, noting that NAHASDA provides that the Secretary "shall . . . make grants" and "shall allocate any amounts" among Indian tribes that comply with certain requirements. Id. at 594. The Claims Court concluded that "the Secretary is thus bound by the statute to pay a qualifying tribe the amount to which it is entitled under the formula, " meaning that the statute "can fairly be interpreted as mandating the payment of compensation by the government." Id. (citing Greenlee Cty. v. United States, 487 F.3d 871, 877 (Fed. Cir. 2007)).

         Initially, the Claims Court dismissed the Tribes' procedural claims, finding that HUD had provided "full notice of the government's claims along with a meaningful opportunity to respond." Id. at 599. The Tribes moved for reconsideration on this point and, on September 29, 2011, the Claims Court vacated its decision. Lummi Tribe II, 106 Fed.Cl. 623, 624 n.1. The Tribes amended their complaint, re-alleged that HUD had violated the procedural requirements of ...

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