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AN E-BULLETIN
LEGAL INFORMATION INSTITUTE -- CORNELL LAW SCHOOL
lii\@lii.law.cornell.edu
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The following decisions have just arrived via the LII's
direct Project HERMES feed from the Supreme Court.
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CHEROKEE NATION OF OKLA. V. LEAVITT (02-1472)
Web-accessible at:
http://supct.law.cornell.edu/supct/html/02-1472.ZS.html
Argued November 9, 2004 -- Decided March 1, 2005*
Opinion author: Breyer
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The Indian Self-Determination and Education Assistance
Act (Act) authorizes the Government and Indian tribes to
enter into contracts in which tribes promise to supply
federally funded services that a Government agency normally
would provide, 25 U.S.C. sect. 450(f); and requires the
Government to pay, inter alia, a tribe's "contract support
costs," which are "reasonable costs" that a federal agency
would not have incurred, but which the tribe would incur in
managing the program, sect.450j-1(a)(2).Here, each Tribe
agreed to supply health services normally provided by the
Department of Health and Human Services' Indian Health
Service, and the contracts included an annual funding
agreement with a Government promise to pay contract support
costs. In each instance, the Government refused to pay the
full amount promised because Congress had not appropriated
sufficient funds.In the first case, the Tribes submitted
administrative payment claims under the Contract Disputes
Act of 1978, which the Department of the Interior (the
appropriations manager) denied. They then brought a breach-
of-contract action. The District Court found against them,
and the Tenth Circuit affirmed. In the second case, the
Cherokee Nation submitted claims to the Department of the
Interior, which the Board of Contract Appeals ordered paid.
The Federal Circuit affirmed.
Held: The Government is legally bound to pay the "contract
support costs" at issue.
Pp. 4-15.
(a) The Government argues that it is legally bound by
its promises to pay the relevant costs only if Congress
appropriated sufficient funds, which the Government contends
Congress did not do in this instance.It does not deny that
it promised, but failed, to pay the costs; that, were these
ordinary procurement contracts, its promises to pay would be
legally binding; that each year Congress appropriated more
than the amounts at issue; that those appropriations Acts
had no relevant statutory restrictions; that where Congress
makes such appropriations, a clear inference arises that it
does not intend to impose legally binding restrictions; and
that as long as Congress has appropriated sufficient legally
unrestricted funds to pay contracts, as it did here, the
Government normally cannot back out of a promise to pay on
grounds of insufficient appropriations. Thus, in order to
show that its promises were not legally binding, the
Government must show something special about the promises at
issue. It fails to do so here. Pp. 4-5.
(b) The Act does not support the Government's initial
argument that, because the Act creates a special contract
with a unique nature differentiating it from standard
Government procurement contracts, a tribe should bear the
risk that a lump-sum appropriation will be insufficient to
pay its contract. In general, the Act's language runs
counter to this view, strongly suggesting instead that
Congress, in respect to a promise's binding nature, meant to
treat alike promises made under the Act and ordinary
contractual promises. The Act uses "contract" 426 times to
describe the nature of the Government's promise, and
"contract" normally refers to "a promise ... for the breach
of which the law gives a remedy, or the performance of which
the law ... recognizes as a duty," Restatement (Second) of
Contracts sect.1. Payment of contract support costs is
described in a provision containing a sample "Contract," 25
U.S.C. sect. 450l(c), and contractors are entitled to "money
damages" under the Contract Disputes Act if the Government
refuses to pay, sect.450m-1(a). Nor do the Act's general
purposes support any special treatment. The Government
points to the statement that tribes need not spend funds "in
excess of the amount of funds awarded," sect.450l(c), but
that kind of statement often appears in procurement
contracts; and the statement that "no [self-determination]
contract ... shall be construed to be a procurement
contract," sect.450b(j), in context, seems designed to
relieve tribes and the Government of technical burdens that
may accompany procurement, not to weaken a contract's
binding nature. Pp. 5-8.
(c) Neither of the phrases in an Act proviso renders
the Government's promise nonbinding. One phrase--"the
Secretary is not required to reduce funding for programs,
projects, or activities serving a tribe to make funds
available to another tribe," sect.450j-1(b)--did not make
the Government's promise nonbinding, since the relevant
appropriations contained unrestricted funds sufficient to
pay the claims at issue. When this happens in an ordinary
procurement contract case, the Government admits that the
contractor is entitled to payment even if the agency has
allocated the funds to another purpose. That the Government
used the unrestricted funds to satisfy important needs--
e.g., the cost of running the Indian Health Service--does
not matter, for there is nothing special in the Act's
language or the contracts to convince the Court that
anything but the ordinary rule applies here. The other
proviso phrase--which subjects the Government's provision of
funds under the Act "to the availability of appropriations,"
ibid.--also fails to help the Government. Congress
appropriated adequate unrestricted funds here, and the
Government provides no convincing argument for a special,
rather than ordinary, interpretation of the phrase.
Legislative history shows only that Executive Branch
officials wanted discretionary authority to allocate a lump-
sum appropriation too small to pay for all contracts, not
that Congress granted such authority. And other statutory
provisions, e.g., sect.450j-1(c)(2), to which the Government
points, do not provide sufficient support. Pp. 8-12.
(d) Finally, the Government points to sect.314 of the
later-enacted 1999 Appropriations Act, which states that
amounts "earmarked in committee reports for the ... Indian
Health Service ... [for] payments to tribes ... for contract
support costs ... are the total amounts available for fiscal
years 1994 through 1998 for such purposes." Th
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