Salazar v. Ramah Navajo Chapter
567 U.S. ___ (2012)

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Justia Opinion Summary
The Indian Self-Determination and Education Assistance Act (ISDA), 25 U.S.C. 450 et seq., directed the Secretary of the Interior to enter into contracts with willing tribes, pursuant to which those tribes would provide services such as education and law enforcement that otherwise would have been provided by the Federal government. ISDA mandated that the Secretary shall pay the full amount of "contract support costs" incurred by tribes in performing their contracts. At issue was whether the Government must pay those costs when Congress appropriated sufficient funds to pay in full any individual contractor's contract support costs, but not enough funds to cover the aggregate amount due every contractor. The Court held that, consistent with longstanding principles of Government contracting law, the Government must pay each tribe's contract support costs in full.

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200 U. S. 321 .

SUPREME COURT OF THE UNITED STATES

Syllabus

SALAZAR, SECRETARY OF THE INTERIOR, et al. v. RAMAH NAVAJO CHAPTER et al.

certiorari to the united states court of appeals for the tenth circuit

No. 11–551. Argued April 18, 2012—Decided June 18, 2012

The Indian Self-Determination and Education Assistance Act (ISDA) directs the Secretary of the Interior to enter into contracts with willing tribes under which they will provide services such as education and law enforcement that the Federal Government otherwise would have provided. It requires the Secretary to contract to pay the “full amount” of “contract support costs,” 45 U. S. C. §§450j–1(a)(2), (g), subject to the availability of appropriations, §450j–1(b). In the event of a contractual breach, tribal contractors are entitled to seek money damages under the Contract Disputes Act.

          In Fiscal Years (FYs) 1994 to 2001, respondent Tribes contracted with the Secretary to provide services. During each of those FYs, Congress appropriated sufficient funds to pay any individual tribal contractor’s contract support costs in full but did not appropriate enough to pay all tribal contractors collectively. Unable to pay every contractor in full, the Secretary paid the Tribes on a uniform, pro rata basis. Respondents sued under the Contract Disputes Act for breach of contract. The District Court granted the Government summary judgment. The Tenth Circuit reversed, finding the Government liable to each contractor for the full contract amount.

Held: The Government must pay each Tribe’s contract support costs in full. Pp. 5−18.

     (a) In Cherokee Nation of Okla. v. Leavitt, 543 U. S. 631 , this Court considered the Government’s promise to pay contract support costs in ISDA self-determination contracts that made the Government’s obligation “subject to the availability of appropriations,” id., at 634−637. The Government contended that Congress appropriated inadequate funds to fulfill its contractual obligations to the Tribes, while meeting the agency’s competing fiscal priorities. Because Congress appropriated sufficient legally unrestricted funds to pay the contracts, however, the Court held that the Government was obligated to pay those costs in full absent “something special about the promises,” id., at 637–638.

     That conclusion followed directly from well-established principles of Government contracting law: When a Government contractor is one of several persons to be paid out of a larger appropriation sufficient in itself to pay the contractor, the Government is responsible to the contractor for the full amount due under the contract, even if the agency exhausts the appropriation in service of other permissible ends. See Ferris v. United States, 27 Ct. Cl. 542, 546. That is so “even if an agency’s total lump-sum appropriation is insufficient to pay all” of its contracts. Cherokee Nation, 543 U. S., at 637. This principle safeguards both the expectations of Government contractors and the long-term fiscal interests of the United States. Contractors need not keep track of agencies’ shifting priorities and competing obligations; rather, they may trust that the Government will honor its contractual promises. And the rule furthers “the Government’s own long-run interest as a reliable contracting partner in the myriad workaday transaction of its agencies.” United States v. Winstar Corp., 518 U. S. 839 . Pp. 5–8.

     (b) The principles underlying Cherokee Nation and Ferris control here. Once “Congress has appropriated sufficient legally unrestricted funds to pay the contracts at issue, the Government normally cannot back out of a promise 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 the contracts the agency has made.” Cherokee Nation, 543 U. S., at 637. That condition is satisfied here, because Congress made sufficient funds available to pay any individual contractor in full. Pp. 8−10.

     (c) The Government attempts to distinguish Ferris and Cherokee Nation on the ground that they involved unrestricted, lump-sum appropriations, while Congress here appropriated “not to exceed” a certain amount for contract support costs. The effect of the appropriations in each case, however, was identical: the agency remained free to allocate funds among multiple contractors, so long as the contracts served the purpose Congress identified. The “not to exceed” language still has legal effect; it prevents the Secretary from reprogramming other funds to pay contract support costs, thereby protecting funds that Congress envisioned for other Bureau of Indian Affairs programs.

     Section 450j–1(b), which specifies that the Secretary is not required to reduce funding for one tribe’s programs to make funds available to another tribe, does not warrant a different result. Consistent with ordinary Government contracting principles, that language merely underscores the Secretary’s discretion to allocate funds among tribes. It does not alter the Government’s legal obligation when the Secretary fails to pay.

     The Government’s remaining counterarguments are unpersuasive. First, it suggests that the Secretary could violate the Anti-Deficiency Act, which prevents federal officers from making or authorizing an expenditure or obligation exceeding an amount available in an appropriation. That Act applies only to government officials, however, and does not affect the rights of citizens contracting with the Government. Second, the Government argues that permitting respondents to recover from the Judgment Fund would circumvent Congress’ intent to cap total expenditures for contract support costs. But ISDA expressly provides that tribal contractors may sue for “money damages” under the Contract Disputes Act, and any ensuing judgments are payable from the Judgment Fund. See Cherokee Nation, 543 U. S., at 642. Third, the Government invokes cases in which courts have rejected contractors’ attempts to recover for amounts beyond the maximum appropriated by Congress for a particular purpose. See, e.g., Sutton v. United States, 256 U. S. 575 . However, Sutton involved a specific line-item appropriation for an amount beyond which the sole contractor could not recover. This case involves several contractors, each of whom contracted within the lump-sum amount Congress appropriated for all contractors. Unlike the sole contractor in Sutton, they cannot reasonably be expected to know how much remained available of Congress’ lump-sum appropriation. Finally, the Government claims that legislative history suggests that Congress approved of pro rata distribution, but “indicia in committee reports and other legislative history as to how funds should or are expected to be spent do not establish any legal requirement on the agency.” Lincoln v. Vigil, 508 U. S. 182 . Pp. 11−17.

     (d) This case is the product of two decisions in some tension: Congress required the Secretary to accept every qualifying ISDA contract, promising “full” funding for all contract support costs, but then appropriated insufficient funds to pay in full each tribal contractor. Responsibility for the resolution of that situation, however, is committed to Congress. Pp. 17−18.

644 F. 3d 1054, affirmed.

     Sotomayor, J., delivered the opinion of the Court, in which Scalia, Kennedy, Thomas, and Kagan, JJ., joined. Roberts, C. J., filed a dissenting opinion, in which Ginsburg, Breyer, and Alito, JJ., joined.

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