Petition for Writ of Certiorari — Lummi Tribe of the Lummi Reservation, et al., Petitioners v. United States

App. 1

United States Court of Appeals

for the Federal Circuit

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LUMMI TRIBE OF THE LUMMI

RESERVATION, WASHINGTON,

LUMMI NATION HOUSING AUTHORITY,

HOPI TRIBAL HOUSING AUTHORITY,

FORT BERTHOLD HOUSING AUTHORITY,

Plaintiffs-Appellees

FORT PECK HOUSING AUTHORITY,

Plaintiff

v.

UNITED STATES,

Defendant-Appellant.

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2016-2196

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Appeal from the United States Court of Federal

Claims in No. 1:08-cv-00848-EGB, Senior Judge Eric G.

Bruggink.

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Decided: September 12, 2017

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JOHN FREDERICKS, III, Fredericks Peebles & Morgan, LLP, Mandan, ND, argued for plaintiffs-appellees.

Also represented by JEFFREY S. RASMUSSEN, Louisville,

CO.

App. 2

STEVEN J. GILLINGHAM, Commercial Litigation

Branch, Civil Division, United States Department

of Justice, Washington, DC, argued for defendantappellant. 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.

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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

App. 3

Court to dismiss this action for lack of subject-matter

jurisdiction.

BACKGROUND

Congress enacted NAHASDA, 25 U.S.C. §§ 41014243, 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

App. 4

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

App. 5

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

App. 6

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 NAHASDA, and

argued for the first time that those violations rendered

the change in grant funds an illegal exaction. Id. at

625.

The government thereafter filed another motion to

dismiss, arguing that HUD had complied with all relevant NAHASDA provisions. Id. at 623-24. The Claims

Court disagreed, holding that “[p]roviding [the Tribes]

with the opportunity for a hearing in this case before

adjusting their grant amounts was . . . something HUD

was required – but failed – to do.” Id. at 633. The issue

of whether HUD, on the merits, had properly determined the Tribes’ FCAS units when applying NAHASDA

formulae was reserved for trial. See Lummi Tribe of the

App. 7

Lummi Reservation v. United States, 112 Fed. Cl. 353,

355 n.2 (2013) (“Lummi III”).

The case was then transferred to Senior Judge

Bruggink, who ordered supplemental briefing to address

a number of questions, including whether NAHASDA is

money mandating and whether NAHASDA’s status as

such affected the illegal exaction claim. See Order,

Lummi, No. 08-848C (Fed. Cl. Sept. 30, 2015), ECF

No. 121. The Claims Court reaffirmed its holding that

NAHASDA is money mandating, but held that “the

failure to give a hearing under § 4165 does not, on its

own, support an illegal exaction claim.” Id. at 5. The

court explained that “the substantive provisions of

NAHASDA [are money mandating], not its procedural

elements,” and “nothing in the statutory framework

. . . suggests that the remedy for failure to afford procedural rights is, without further proof of entitlement,

the payment of money.” Id.

Because the Claims Court’s finding that NAHASDA

itself is money mandating was therefore dispositive

on the issue of jurisdiction, the government sought

and obtained certification for interlocutory appeal.

The Tribes, meanwhile, sought reconsideration of

the Claims Court’s illegal exaction holding, which the

Claims Court denied. Order, Lummi, No. 08-848C (Fed.

Cl. Apr. 20, 2016), ECF No. 138; Order, Lummi, No.

2016-124 (Fed. Cir. June 9, 2016), ECF No. 1-2.

App. 8

STANDARD OF REVIEW

“Subject matter jurisdiction is a question of law

that we review de novo.” Litecubes, LLC v. N. Light

Prods., 523 F.3d 1353, 1360 (Fed. Cir. 2008). In particular, we “review[ ] without deference the trial court’s

statutory interpretation.” Samish Indian Nation v.

United States, 419 F.3d 1355, 1364 (Fed. Cir. 2005).

The “plaintiff bears the burden of establishing subjectmatter jurisdiction by a preponderance of the evidence.” Hopi Tribe v. United States, 782 F.3d 662, 666

(Fed. Cir. 2015).

DISCUSSION

The Tucker Act itself does not create a substantive

cause of action; in order to come within the jurisdictional reach and the waiver of sovereign immunity in

the Tucker Act, a plaintiff must identify a separate

source of substantive law that creates the right to

money damages. United States v. Mitchell, 463 U.S.

206, 216 (1983); United States v. Testan, 424 U.S. 392,

398 (1976). In the parlance of Tucker Act cases, that

source must be “money-mandating.” See Mitchell, 463

U.S. at 217; Testan, 424 U.S. at 398. On appeal, the government makes a single affirmative argument: the

Claims Court erred in finding NAHASDA to be a

money-mandating statute, such that the Claims Court

is without jurisdiction over this case. We agree.

A statute is money mandating if either: (1) “it can

fairly be interpreted as mandating compensation by

the Federal Government for . . . damages sustained”;

App. 9

or (2) “it grants the claimant a right to recover damages either expressly or by implication.” Blueport Co.,

LLC v. United States, 533 F.3d 1374, 1383 (Fed. Cir.

2008) (quoting Mitchell, 463 U.S. at 216-17 (internal

quotation marks omitted)). NAHASDA does neither, as

revealed by the ultimately equitable nature of the

Tribe’s claims. We find National Center for Manufacturing Sciences v. United States, 114 F.3d 196 (Fed. Cir.

1997), instructive on this point. The statute at issue in

that case stated that “not less than $40,000,000 of the

funds appropriated in this paragraph shall be made

available only for the [plaintiff ].” Nat’l Ctr., 114 F.3d at

198 (quoting Pub. L. No. 103-139, 107 Stat. 1418, 1433

(1993)). The Air Force only released $24,125,000, and

so the plaintiff brought suit in district court, seeking

an order directing the Air Force to release the remainder. On the Air Force’s motion, the district court transferred the case to the Claims Court, a transfer that

this court reversed on appeal. Specifically, relying on

Bowen v. Massachusetts, 487 U.S. 879 (1988), this court

outlined “the kinds of statutory claims for which a

Tucker Act remedy is available” – and found the statute at issue wanting:

Some portions of NCMS’s complaint suggest

that NCMS seeks a “naked money judgment”

for $15,875,000 against the government. Other

portions of the complaint, however, make

clear that NCMS anticipates the need for injunctive relief, such as an order enjoining the

defendants from obligating and disbursing

particular funds that should be reserved for

NCMS, and “[e]xtending the time of obligation”

App. 10

in the Appropriations Act to preserve the

status quo. Looking behind the complaint,

moreover, we conclude that it is doubtful that

a simple money judgment in NCMS’s favor

would be appropriate, even if NCMS is correct

in its claim that it is entitled to have the remaining $15,875,000 referred to in the Appropriations Act allotted to its account.

The Appropriations Act directs that the appropriated funds be used “[f ]or expenses necessary for basic and applied scientific

research, development, test and evaluation,

including maintenance, rehabilitation, lease,

and operation of facilities and equipment, as

authorized by law.” Pub. L. No. 103-139, 107

Stat. 1418, 1433 (1993). Thus, as NCMS acknowledged at oral argument, it would not be

entitled to a monetary judgment that would

allow it to use the funds appropriated under

the Act for any purpose, without restriction. Instead, the Act requires that NCMS use any

money disbursed from the appropriated funds

to perform the basic and applied research

functions called for in the Act. The Act thus

contemplates a cooperative, ongoing relationship between NCMS and the Air Force in the

allocation and use of the funds.

Nat’l Ctr., 114 F.3d at 201 (emphases added). Accordingly, we determined that the district court was not “divest[ed] . . . of the authority to conduct APA review in

this case,” because “the remedy provided by a Tucker

Act suit in the [Claims Court would] not serve as the

‘other adequate remedy in a court.’ ” Id. at 202 (quoting

App. 11

5 U.S.C. § 704); see generally 5 U.S.C. § 704 (“Agency

action made reviewable by statute and final agency action for which there is no other adequate remedy in a

court are subject to judicial review.”) (emphasis added).

The Tribes correctly observe that National Center

did not explicitly hold that the Claims Court was without jurisdiction to hear the plaintiff ’s claim. Whether

or not that conclusion can be fairly implied from the

reasoning in National Center, the reasoning alone remains instructive. Under NAHASDA, the Tribes are

not entitled to an actual payment of money damages,

in the strictest terms; their only alleged harm is having

been allocated too little in grant funding. Thus, at best,

the Tribes seek a nominally greater strings-attached

disbursement. But any monies so disbursed could

still be later reduced or clawed back. See 25 U.S.C.

§ 4161(a)(1). And any property acquired with said monies would be “held in trust” by the Tribes, “as trustee

for the beneficiaries” of NAHASDA. 2 C.F.R. § 200.316;

see generally 24 C.F.R. §§ 85.1, 1000.26. The Tribes are

even restricted with respect to the particular bidding

and bond terms they may use for, say, housing construction contracts. See 2 C.F.R. § 200.325; 24 C.F.R.

§ 1000.26.

To label the disbursement of funds so thoroughly

scrutinized and cabined as a remedy for “damages”

would strain the meaning of the term to its breaking

point. As National Center highlights, that relief is equitable – and thus not within the Claims Court’s purview. “Although the Tucker Act has been amended to

permit the [Claims Court] to grant equitable relief

App. 12

ancillary to claims for monetary relief,” there must be

an underlying claim for “ ‘actual, presently due money

damages from the United States.’ ” Nat’l Air Traffic

Controllers Ass’n v. United States, 160 F.3d 714, 716

(Fed. Cir. 1998) (quoting United States v. King, 395 U.S.

1, 3 (1969)) (emphasis added). “It is not enough that

the court’s decision . . . will ultimately enable the plaintiff to receive money from the government.” Id. at 716;

see generally Katz v. Cisneros, 16 F.3d 1204, 1208-09

(Fed. Cir. 1994) (“Hollywood Associates seeks payments to which it alleges it is entitled pursuant to federal statute and regulations; it does not seek money as

compensation for a loss suffered. . . . That a payment

of money may flow from a decision that HUD has erroneously interpreted or applied its regulation does not

change the nature of the case.”).

Here, the underlying claim is not for presently

due money damages. It is for larger strings-attached

NAHASDA grants – including subsequent supervision and adjustment – and, hence, for equitable relief.

Indeed, any such claim for relief under NAHASDA

would necessarily be styled in the same fashion; the

statute does not authorize a free and clear transfer of

money. Accordingly, the Claims Court erred in finding

NAHASDA to be money mandating.

The Tribes contend, in the alternative, that alleged procedural failures associated with HUD’s grant

decision resulted in a per se illegal exaction, independently conferring jurisdiction on the Claims Court.

We disagree. An illegal exaction claim must be based

on property taken from the claimant, not property left

App. 13

unawarded to the claimant, rendering the Tribes’ exaction claim invalid on its face. “An ‘illegal exaction’ . . .

involves money that was ‘improperly paid, exacted, or

taken from the claimant in contravention of the Constitution, a statute, or a regulation.’ ” Norman v. United

States, 429 F.3d 1081, 1095 (Fed. Cir. 2005) (quoting

Eastport S.S. Corp. v. United States, 372 F.2d 1002,

1007 (Ct. Cl. 1967)) (emphasis added). The Tribes have

not and cannot provide legal support for the notion

that the failure to disburse property that was never in

the claimant’s possession or control constitutes an exaction. Accordingly, we reject their illegal exaction

claim as an alternative basis for the Claims Court’s jurisdiction.

Although we adopt the government’s position, we

have severe misgivings about the incongruency of its

stances in this and related litigation. In particular, it

appears that the government has taken, essentially,

the opposite position in at least one of our sister circuits in parallel litigation. See Modoc Lassen Indian

Hous. Auth. v. United States Dep’t of Hous. and Urban

Dev., 864 F.3d 1212, 2017 WL 3140877 (10th Cir. July

25, 2017). In Modoc, an appeal from a federal district

court action that was brought pursuant to NAHASDA,

the government argued that “the district court nevertheless erred in ordering HUD to return the alleged

[NAHASDA] over-payments to the Tribes because . . .

such an order amounts to an award of ‘money damages’

and therefore runs afoul of 5 U.S.C. § 702.” Id. at

*2. “[S]ection 702 . . . waives sovereign immunity for

non-monetary claims against federal agencies,” Delano

App. 14

Farms Co. v. California Table Grape Comm’n, 655 F.3d

1337, 1344 (Fed. Cir. 2011) (emphasis added), whereas

the Tucker Act is the appropriate vehicle for pursuing

“the right to money damages.” Fisher v. United States,

402 F.3d 1167, 1172 (Fed. Cir. 2005) (emphasis added).

Two of the Tenth Circuit’s three opinions found the

government’s argument persuasive, holding that § 702

was not the correct vehicle for the Tribes’ claims. Modoc, 2017 WL 3140877, at *10.1

At oral argument before this court, the government appeared to even confirm that there is some tension in the positions that it has taken. Oral Argument

at 13:34-41, available at http://oralarguments.cafc.uscourts.

gov/default.aspx?fl=2016-2196.mp3 (stating that, if this

case were transferred from the Claims Court, “the [district] court could entertain [the claims], but in the end

it would be able to grant no remedy, and that’s what

we’re saying in the Tenth Circuit”). And yet, without

irony, the government accuses the Tribes of adopting

an unfair “gotcha” strategy in this litigation. Appellant

Br. 42. Of the government’s two faces, we find the one

presented to the Claims Court – the one arguing that

this “is not a suit for Tucker Act damages” – to be the

correct one. Id. at 16.

1

Because Modoc was an appeal from a federal district court

action, the Tenth Circuit had no occasion to consider the Tucker

Act’s jurisdictional requirement that a plaintiff identify a separate source of substantive law that is “money-mandating.”

App. 15

CONCLUSION

For the foregoing reasons, the Claims Court’s order is vacated, and we instruct the Claims Court to dismiss this action for lack of subject-matter jurisdiction.

VACATED AND DISMISSED

App. 16

In the United States Court of Federal Claims

No. 08-848C

(Filed: September 30, 2015)

********************

LUMMI TRIBE OF THE

LUMMI RESERVATION, et al.,

Plaintiffs,

v.

THE UNITED STATES,

Defendant.

********************

ORDER

(Filed Sep. 30, 2015)

Plaintiffs, three Indian tribes, bring this case under the Native American Housing Assistance and SelfDetermination Act of 1996 (“NAHASDA”), seeking

recovery of grant funds paid to them pursuant to

NAHASDA but subsequently recaptured by the United

States Department of Housing and Urban Development (“HUD” or “the agency”) after it determined that

the allocation formula upon which payment of the

grant funds was based had been misapplied. In addition to the recaptured funds, plaintiffs also seek recovery of additional unpaid grant funds corresponding

with the fiscal years following the recoupment, which

plaintiffs allege they are entitled to under the correct

application of the allocation formula. Currently pending are those remaining portions of the parties’ crossmotions for summary judgment on which the court has

App. 17

not yet ruled. For the reasons set forth below, we deny

the remaining elements of plaintiffs’ March 25, 2013

motion for summary judgment and grant in part and

deny in part the remaining elements of defendant’s

May 24, 2013 cross-motion for summary judgment.

BACKGROUND

I.

Procedural History

Several rounds of dispositive motions and court

rulings have preceded today’s decision, and a brief

discussion of the earlier holdings is necessary before

examining the issues currently before the court. Pursuant to the United States Housing Act of 1937, currently

codified at 42 U.S.C. §§ 1437-1437x (1994), plaintiffs

oversaw various housing programs on their lands to

assist low-income Indian families become homeowners. To consolidate these programs, Congress enacted

the NAHASDA, as amended, 25 U.S.C. §§ 4101-4212

(2012). NAHASDA terminated the programs established under the Indian Housing Act of 1937 and instituted a system of annual block grants. The statute

charged HUD to create an allocation formula that

would reflect the needs of the Indian tribes, including:

(1) The number of low-income housing dwelling units owned or operated at the time pursuant to a contract between an Indian housing authority for the tribe and the Secretary.

(2) The extent of poverty and economic distress and the number of Indian families

within Indian areas of the tribe. (3) Other

App. 18

objectively measurable conditions as the Secretary and the Indian tribes may specify.

25 U.S.C. § 4152(b) (2006).

The Secretary is given statutory enforcement authority to review adherence to the terms of the grant

programs in at least two ways. 25 U.S.C. § 4161 gives

the Secretary, among other powers, the ability to terminate or reduce grant payments as to which the recipient has failed to comply substantially with any

provision of NAHASDA. Under 25 U.S.C. § 4165, the

Secretary is obligated to conduct reviews and audits on

an annual basis to determine whether recipients have

carried out eligible activities in accordance with the requirements and the primary objectives of this Act and

with other applicable laws, whether the recipient has

complied with the Indian housing plan of the grant

beneficiary, and whether the performance reports

are accurate. Both provisions offer certain procedural

rights to recipients whose grants are affected by the

Secretary’s actions.

Although it is disputed whether the agency acted

under one or both of these provisions, plaintiffs have

argued that, under either scenario, they were entitled

to a hearing prior to the government’s demand for repayment of grant amounts and that the failure to afford such a hearing entitled them to a return of those

funds automatically.

In the first round of litigation, the court held that

NAHASDA is a money-mandating statute pursuant to

which this court has jurisdiction to hear the plaintiffs’

App. 19

claim, and that this suit is not in violation of the AntiDeficiency Act, 31 U.S.C. § 1341(a)(1)(A). Lummi Tribe

of the Lummi Reservation v. United States, 99 Fed. Cl.

584, 597, 605 (2011) (“Lummi I”).1

In Lummi II, we held, contrary to defendant’s argument, that HUD did not have a common law right to

use the remedy of administrative offset to recoup the

grant funds, but rather, NAHASDA provided the applicable procedure. Lummi Tribe of the Lummi Reservation v. United States, 106 Fed. Cl. 623, 631-34 (2012)

(“Lummi II”). Therefore HUD was required to proceed

in compliance with section 4165 by offering notice and

opportunity for a hearing prior to the recapture of

grant funds. Id.

Following Lummi II, the parties filed crossmotions for partial summary judgment, briefing whether

the allocation formula provided in 24 C.F.R. § 1000.318

was contrary to 25 U.S.C. § 4152(b)(1), which would

render the regulation invalid, and whether the agency

adhered to section 4152(b) and properly applied the

allocation formula set out in 24 C.F.R. § 1000.318

when computing the amount of grant funds to which

plaintiffs were entitled. The court upheld the agency’s

use of 24 C.F.R. § 1000.318 as an allocation formula. Lummi Tribe of the Lummi Reservation v. United

States, 112 Fed. Cl. 353, 366 (2013) (“Lummi III”). The

court left undecided the issue of whether HUD acted

1

Lummi I also held that plaintiffs failed to show that NAHASDA

§ 4161 was violated, and in any event, plaintiffs’ failure to assert

their procedural rights at the relevant time constituted a waiver,

but the court later vacated this holding. CM/ECF No. 41.

App. 20

unlawfully in its application of 24 C.F.R. § 1000.318.

Id. at 353 n.2. After Lummi Ill, the parties filed subsequent briefs in support of the remaining issue, and posing a new question for the court to resolve: whether

failure to hold the hearing contemplated by section

4165 amounted, per se, to an illegal exaction for which

the plaintiffs are entitled to recover the recouped

funds.

There thus were two issues remaining: (1) whether

the agency adhered to 25 U.S.C. § 4152(b) by properly

applying the allocation formula set out in 24 C.F.R.

§ 1000.318 when it computed the amount of grant

funds to which plaintiffs were entitled; and (2) whether

failure to hold the § 4165 hearing resulted in a per

se illegal exaction. Subsequently, the court asked for

briefing on these questions and also allowed the parties to reopen our earlier rulings.

After this latest round of briefing, we can isolate

the following matters to be resolved: (1) defendant asks

us to reverse our prior ruling that NAHASDA mandates the payment of money; (2) defendant also asks

the court to revisit our ruling that the agency did not

have a common law right of recoupment; (3) it also contends that enforcement of the administrative protections of section 4165 belongs in the district court under

the Administrative Procedure Act (“APA”); (4) whether

the proper remedy for failure to afford a 4165 hearing

is, as defendant argues, to remand for a hearing or, as

plaintiffs contend, to award plaintiffs a money judgment for the amount of the requested funds; (5) plaintiffs ask us to reconsider our ruling that 24 C.F.R.

App. 21

§ 1000.318 is valid, and finally, (6) whether, assuming

the court can review the merits of the agency’s recoupment and non-payment decisions, there are any material facts still in dispute.

Although recognizing that we agreed to entertain

the parties’ challenges to our prior rulings, after considering their additional arguments, we reaffirm our

prior rulings in toto. We conclude first, therefore, that

NAHASDA is money mandating. We also reaffirm our

rulings that 24 C.F.R. § 1000.318 is valid and that the

agency has no independent right of common law recoupment. These reaffirmances have the effect of resolving all six of the issues isolated above and one of

the two questions remaining on summary judgment.

The fact that NAHASDA is money mandating means

not only that failure to enforce properly its substantive

provisions, including 24 C.F.R. § 1000.318, entitles

plaintiffs to make an affirmative claim for new monies,

but that they also may argue that improper recoupment of past grant amounts was an illegal exaction

based solely on NAHASDA itself, with no further need

for statutory support. The agency was either correct or

incorrect in calculating the amount of grant support to

which the tribes were entitled. If it was incorrect HUD

should return any monies improperly exacted and

should pay any amounts due.

Of the issues resolved by reaffirming our prior rulings, only one merits further discussion – whether

HUD’s failure to provide plaintiffs with a section 4165

hearing resulted in a per se illegal exaction. We conclude that it did not, and therefore must reject

App. 22

plaintiffs’ assertion that the remedy for failure to afford a hearing is, automatically, the return of monies.

What is money mandating are the substantive provisions of NAHASDA, not its procedural elements. There

is nothing in the statutory framework which suggests

that the remedy for failure to afford procedural rights

is, without further proof of entitlement, the payment of

money. Thus, the failure to give a hearing under section 4165 does not, on its own, support an illegal exaction claim. The government only has plaintiffs’ money

in its pocket, and therefore only committed an illegal

exaction, if 24 C.F.R. § 1000.318 was improperly applied. For the same reason, the remedy for failure to

afford a hearing is not a remand to the agency; the substantive entitlement to grant funds stands on its own.

Thus, the only question remaining is the merits of

the agency’s calculation of the proper grant amounts;

namely, whether there are disputed issues of fact. We

find that there are.

In concert with representatives from various

tribes, HUD promulgated a final rule detailing how the

annual grant amount would be calculated. 24 C.F.R.

§§ 1000.301-340 (1999) (regulations containing the allocation formula upon which grant funds are based).

The formula contains two components: (1) the number

of rental units and lease-to-own units owned by each

tribe under the Housing Act of 1937 as of the effective

date of NAHASDA, September 30, 1997, known as the

Formula Current Assisted Stock (“FCAS”), and (2) each

tribe’s need. These components have an inverse relationship: the more FCAS units reported, the less funding the

App. 23

tribe would receive under the need component. Furthermore, HUD’s regulations specified that a housing

unit would not be considered as part of FCAS “when

the Indian tribe . . . no longer has the legal right to

own, operate, or maintain the unit” so long as such

units are conveyed “as soon as practicable after a unit

becomes eligible for conveyance.” Id. § 1000.318.

Plaintiffs received NAHASDA housing grants

from 1998 through 2009. A nationwide audit performed by HUD’s Office of Inspector General (“OIG”)

in 2001 revealed that funds had not been properly allocated because there were housing units included in

the calculations that did not qualify as FCAS units.

Specifically, the audit report noted that HUD failed to

enforce 24 C.F.R. § 1000.318, explaining that because

Mutual Help and Turnkey III programs do not usually

exceed 25 years, it is expected that some of the units

should be paid off and the tribe would no longer have

the legal right to own, operate, or maintain the units.

See Lummi I, 99 Fed. Cl. at 588. After a further internal investigation, HUD determined that it had overpaid grant funds to plaintiffs. Accordingly, HUD sent

letters to plaintiffs informing them of the overpayments. To remedy this, HUD decided to adjust the

grant amounts plaintiffs would receive in the ensuing

years to, in effect, recoup previous overpayments and

to reflect an updated FCAS.

Grant funds not distributed on the basis of FCAS

are distributed on the basis of need. Therefore, the

more FCAS units reported, the less funds allocated

based on the need component. The specific regulation

App. 24

at issue here, specifies when a housing unit will no

longer be considered FCAS:

(a) Mutual Help and Turnkey III units shall

no longer be considered Formula Current Assisted Stock when the Indian tribe, TDHE, or

IHA no longer has the legal right to own, operate, or maintain the unit, whether such

right is lost by conveyance, demolition, or otherwise, provided that:

(1) Conveyance of each Mutual Help or

Turnkey III unit occurs as soon as practicable after a unit becomes eligible for conveyance by the terms of the MHOA; and

(2) The Indian tribe, TDHE, or IHA actively enforce strict compliance by the

homebuyer with the terms and conditions

of the MHOA, including the requirements

for full and timely payment.

24 C.F.R. § 1000.318. This leads us to examine the particulars of the plaintiffs here.

HUD’s Recoveries from Lummi

HUD recovered $845,667 in alleged overpayments

to Lummi for Fiscal Years (“FY”) 1998 to 2003, which

were based on a communication from a Lummi representative informing HUD that Lummi project WA-11

had 39 Low Rent and 15 Mutual Help units. According

to a later determination by HUD, this project only

had 39 Mutual Help units, and therefore HUD had calculated the grant amount with 15 more units than

App. 25

existed and paid Lummi at the higher Low Rent subsidy. Lummi accepted the subsidy. After HUD determined that it had made an error, it recovered the

amount from Lummi. Def.’s Cross Mot. for Summ. J.

41-43, (May 24, 2013) (“Def.’s Cross Mot.”).

For FY 2008 and 2009, Lummi reported to HUD

that it had conveyed certain units and identified the

fiscal years it had done so. However, this report was

one year late, resulting in an alleged overpayment of

$14,029 and $3,540 in FY 2008 and 2009, respectively.

The allocation formula for FY 2008 included four units

that Lummi had already conveyed, and the formula for

FY 2009 contained one extra unit. Accordingly, HUD

sought recovery because it believed that Lummi was

not entitled to funding for those units. Id. At 43.

During all of these recoveries, Lummi had sufficient funds to repay HUD, and Lummi never requested

a formal hearing. Furthermore, Lummi had spent

some of its grant funds on administration and planning.

HUD’s Recoveries from Hopi

On September 5, 2002, Hopi informed HUD that it

had conveyed more than 70 units in three projects.

These conveyances were delayed for more than three

years due to disagreements between the Hopi Realty

Office and the Hopi Tribal Housing Authority. The delay resulted in an alleged overfunding of $558,169 for

FY 1998 to 2002, and HUD subsequently recovered

that amount. Def.’s Cross Mot. 43-44.

App. 26

HUD calculated an additional overpayment of

$26,735 for FY 2002 to 2005. This overpayment was

the result of Hopi admitting that it had conveyed two

units in FY 2002, but had continued to receive funding

for them through FY 2005. Additionally, Hopi had one

unit that was eligible for conveyance in FY 2001, but it

did not convey it until 2005. Thus, HUD sought to recover the amount attributable to that unit. Def.’s Cross

Mot. 44-45.

On October 18, 2005, HUD informed Hopi that it

had also been overfunded for FY 2004 and 2005 in the

amounts of $10,796 and $11,166, respectively. Knowledge of this overfunding was gleaned from Hopi’s admission that it had conveyed four units in FY 2003 but

continued to receive funding for them through FY

2005. Def.’s Cross Mot. 45.

A fourth recovery of $251,692 occurred after Hopi

informed HUD that 56 units in two projects had become conveyance eligible at various times between FY

2003 and 2006. Hopi did not explain why the conveyances were delayed. As such, HUD determined that

Hopi was overfunded during FY 2004 to 2006. Hopi responded to HUD’s request for repayment by saying

that Hopi had no basis for an appeal and authorized

HUD to deduct the overpayments from its FY 2007

grant allocation. Id. at 46.

HUD also determined that Hopi was overfunded

for FY 2006 and 2007 by $93,094. According to HUD,

this overfunding was the result of the inclusion in

Hopi’s FCAS of two non-existent units and several

App. 27

other units that had become conveyance eligible but

Hopi failed to convey. Hopi acknowledged the overfunding and authorized HUD to recover the funds from

its FY 2008 grant. Id. at 47.

Finally, Hopi reported to HUD on October 27,

2009, that four units were conveyance-eligible in FY

2008, but had not been conveyed due to tenant accounts receivable issues. HUD determined that these

units should have been ineligible for funding and had

resulted in an overpayment of $13,047 in FY 2009.

Hopi did not challenge HUD’s determination. Id. at 4748.

As with the recoveries from Lummi, Hopi had excess grant funds available to repay HUD for the overfunding. Hopi never requested a formal hearing, and it

also had spent funds on administration and planning.

HUD’s Recoveries from Fort Berthold

Between October 2002 and December 2003, HUD

wrote to Fort Berthold three times inquiring about

eight units that were conveyance eligible in 2001 but

had not been conveyed. When Fort Berthold did not respond, HUD concluded that the units were ineligible

for funding and that Fort Berthold had been overfunded by $35,491 for FY 2002 and 2003. HUD consequently sought recovery, and Fort Berthold did not

appeal or request a hearing. Id. at 48.

On September 30, 2010, Fort Berthold’s attorney

reported that it had conveyed 20 units in project ND-08

App. 28

on various dates between FY 2001 and 2010. Accordingly, HUD determined that Fort Berthold had been

overfunded for FY 2001 to 2008. However, HUD only

sought recovery of $91,956 from FY 2006 to 2008. Id.

at 49.

On April 7, 2011, Fort Berthold’s attorney informed HUD that it had conveyed five units in project

ND-10 between FY 2001 and 2009, and 11 units in project ND-13 between FY 2001 and FY 2010. HUD calculated that Fort Berthold received funding for 12

ineligible units in FY 2008 and 13 ineligible units in

FY 2009, resulting in a total overpayment of $67,043.

HUD sought recoveries for those two years, but did not

seek recoveries for FY 2001 to 2007. Id. at 50.

Similar to the recoveries from Lummi and Hopi,

Fort Berthold had excess grant funds with which they

could repay HUD for the overfunding in each of these

scenarios.

All three tribes contend that HUD acted unlawfully by excluding units which they still owned or operated and by excluding units that had not actually

been lost by conveyance, demolition, or otherwise. In

their supplemental brief, in response to the court’s

question of whether there are any facts in dispute that

prevent summary judgment, plaintiffs argue that there

are numerous factual disputes regarding whether

HUD’s removal of FCAS units was lawful. Using Fort

Peck Housing Auth. v. United States, 2012 U.S. Dist.

LEXIS 124049 (D. Colo. Aug. 31, 2012) (“Fort Peck III”)

as support, plaintiffs point out a number of scenarios

App. 29

in which Fort Peck III held that HUD removed units

still eligible for FCAS: (1) tenant is in arrears on payments or other obligations required for conveyance;

(2) homes awaiting federally-funded repair or modernization work; (3) Mutual Help units were demolished

and replaced; (4) Mutual Help units were converted to

Low Rent units; (5) a new tenant occupied the unit during the pendency of the initial contract term; (6) conveyance was delayed due to legal impediment; and

(7) conveyance cannot be undertaken due to clouds on

title due to probate or intestacy. According to plaintiffs

in this case, the tribes owned units which fell within

several of these categories, but were removed from

plaintiffs’ FCAS anyway.

Specifically, plaintiffs argue that both Hopi and

Fort Berthold had units with tenants who were in arrears on payments or who had failed to meet other obligations under their homebuyer agreements, and

therefore plaintiffs faced legal impediments to conveyance even though HUD considered the units “eligible

for conveyance” under the allocation formula. Moreover, plaintiffs argue that Hopi had a unit removed

which was demolished. Because HUD policy prior to

2008 was to exclude demolished units even if they were

rebuilt, plaintiffs argue that they had no incentive to

replace the demolished unit. Plaintiffs contend that

there are issues of material fact remaining concerning

whether plaintiffs would have replaced some or all

of the demolished units had they known they could

continue to include the units in their FCAS. Plaintiffs

also argue that both Lummi and Hopi had funding

withheld due to conversion of homes from Mutual Help

App. 30

to Low Rent because HUD funded these units at the

lower Mutual Help amount. Plaintiffs further allege

that Fort Berthold had a unit removed from its FCAS

that had been returned to the tenant by the tribe and

accordingly was not eligible for conveyance. Additionally, plaintiffs contend that Hopi had a large number

of units removed from its FCAS that had various other

legal impediments preventing conveyance. Lastly, plaintiffs argue that both Fort Berthold and Hopi had homes

removed from their FCAS featuring issues related to

probate or intestacy, resulting in clouds on title that

made it impractical or illegal to convey the homes

In response, defendant argues that the record is

clear that HUD removed the majority of the units from

plaintiffs’ FCAS because the units never existed or the

tribe reported to HUD that it had conveyed the units.

With regard to the unit that Hopi had removed from

its FCAS due to demolition, defendant contends that it

was removed because Hopi told HUD that the unit was

demolished and not rebuilt. Defendant argues that

Hopi’s incentives for replacing or not replacing the unit

do not raise genuine issues of material fact. Defendant

characterizes several of plaintiffs’ disputes as legal disputes rather than factual disputes and further argues

that, with regard to the rest of the units, the facts are

clear as to why the units were removed from plaintiffs’

FCAS.

After an examination of the parties’ briefs and

supporting documentation, we find that plaintiffs have

set forth a number of factual issues regarding whether

some of the excluded units were actually eligible for

conveyance and thus were properly excluded under the

App. 31

formula. They allege that housing units removed from

their FCAS were subject to legal constraints that prevented conveyance. Pls.’ Supp. Br. at 26; Pls.’ Resp. To

Def ’s Prop. Findings of Uncontroverted Fact ¶¶ 79, 89,

92, 98. Although defendant contends that the Hopi

tribe failed to present such arguments to HUD in the

administrative process, that is immaterial. If these

units were in fact subject to legal impediments that

prevented conveyance, then they should not have been

excluded from FCAS because they were never “eligible for conveyance” under 24 C.F.R. § 1000.318(a)(1).

Whether they were subject to such legal impediments

is an issue of fact that the parties dispute and which

cannot be decided on summary judgment. Some of the

remainder of plaintiffs’ excluded units present similar

factual issues. We find, therefore, that summary judgment with respect to the final remaining issue –

whether the agency properly calculated plaintiffs’

grant amounts – is not possible.

CONCLUSION

Plaintiffs’ remaining arguments in support of

summary judgment are denied; defendant’s remaining

arguments in support of summary judgment are

granted in part and denied in part as explained above.

The parties are directed to consult and propose a pretrial schedule on or before October 30, 2015.

s/ Eric G. Bruggink

ERIC G. BRUGGINK

Judge

App. 32

NOTE: This order is nonprecedential.

United States Court of Appeals

for the Federal Circuit

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

LUMMI TRIBE OF THE LUMMI

RESERVATION, WASHINGTON,

LUMMI NATION HOUSING AUTHORITY,

HOPI TRIBAL HOUSING AUTHORITY,

FORT BERTHOLD HOUSING AUTHORITY,

Plaintiffs-Appellees

FORT PECK HOUSING AUTHORITY,

Plaintiff

v.

UNITED STATES,

Defendant-Appellant.

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

2016-2196

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

Appeal from the United States Court of Federal

Claims in No. 1:08-cv-00848-EGB, Senior Judge Eric G.

Bruggink.

App. 33

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

ON PETITION FOR PANEL REHEARING

AND REHEARING EN BANC

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

Before PROST, Chief Judge, NEWMAN, LOURIE, DYK,

MOORE, O’MALLEY, REYNA, WALLACH, TARANTO, CHEN,

and STOLL, Circuit Judges.*

PER CURIAM.

ORDER

Appellees Lummi Tribe of the Lummi Reservation, Washington, Lummi Nation Housing Authority,

Hopi Tribal Housing Authority, and Fort Berthold

Housing Authority filed a combined petition for panel

rehearing and rehearing en banc. A response to the petition was invited by the court and filed by appellant

United States. The petition was referred to the panel

that heard the appeal, and thereafter the petition for

rehearing en banc was referred to the circuit judges

who are in regular active service.

Upon consideration thereof,

IT IS ORDERED THAT:

The petition for panel rehearing is denied.

The petition for rehearing en banc is denied.

* Circuit Judge Hughes did not participate.

App. 34

The mandate of the court will issue on January 12,

2018.

January 5, 2018

Date

FOR THE COURT

/s/ Peter R. Marksteiner

Peter R. Marksteiner

Clerk of Court