Lummi Tribe of the Lummi Reservation v. United States
870 F.3d 1313 (Fed. Cir. 2017)
Authored by Dana Florkowski
Statement of Facts: Appellees, the Lummi Tribe of the Lummi Reservation, Lummi Nation Housing Authority, Hopi Tribal Housing Authority, and Fort Berthold Housing Authority, which are an Indian tribe and three tribal housing entities (collectively “the Tribes”), qualified for and received block grants through the Native American Housing Assistance and Self-Determination Act of 1996 (“NAHASDA”). Congress enacted NAHASDA with the purpose of improving the housing conditions and socioeconomic status of Native Americans. NAHASDA includes a mechanism through which tribes can receive block grants to use to provide affordable housing for tribal members. One of the factors in determining NAHASDA eligibility is that the tribes must own and operate low-income housing units, called “Formula Current Assisted Stock,” (“FCAS”). If a tribe has units that qualify as FCAS and meets other factors, NAHASDA entitles the tribe to receive a yearly funding grant. The funding is calculated in accordance with NAHASDA guidelines. The recipients are limited in what they can do with the grant funds. If a grantee does not comply, the statute authorizes means by which the Department of Housing and Urban Development (“HUD”) may recapture the funds. HUD is authorized to terminate payments, reduce payments, limit the availability of payments, or provide a replacement housing entity for the recipient in the case of noncompliance.
In 2001, HUD determined that some of the Tribes’ NAHASDA grant-receiving dwelling units did not qualify as FCAS and that some previous grant funds had been improperly allocated. HUD informed the Tribes of the amount overfunded, the basis for the decision, and which housing units were not FCAS, and provided the Tribes with the opportunity to dispute these findings. HUD then eliminated the ineligible dwelling units from the funding and sought to recover the funding by deducting from future grants. This deduction amounted to $863,236 from Lummi, $249,689 from Fort Berthold, and $964,699 from Hopi.
Procedural History: The Tribes sued in the United States Court of Federal Claims (“Claims Court”) under the Tucker Act and Indian Tucker Act, alleging that HUD deprived them of grant funds to which they were entitled. The Tribes alleged that HUD misapplied the formula for determining grant eligibility and amount, and that they had been improperly denied a hearing to dispute the findings, to which they were entitled under 25 U.S.C. § 4165. The government filed a motion to dismiss for lack of jurisdiction, arguing that NAHASDA’s block grant provision was not money mandating. The Claims Court found that the grant provision language was money mandating because it “can fairly be interpreted as mandating the payment of compensation by the government.” Lummi Tribe of the Lummi Reservation v. United States, 99 Fed. Cl. 584, 594 (2011).
The Claims Court dismissed the Tribes’ claim that they were entitled to a hearing, but the Tribes moved for consideration and the court vacated. The Tribes amended their complaint to re-allege that HUD had violated procedures and argued that these violations rendered the fund decrease an illegal exaction. The government filed a second motion to dismiss, stating that HUD had complied with all requirements of NAHASDA. The Claims Court did not grant the motion, finding that HUD was, in fact, required to provide the Tribes with a hearing before deducting from their grant amounts.
The Claims Court transferred the case to Senior Judge Bruggink for trial. Judge Bruggink requested supplemental briefing on the issue of whether NAHASDA was money mandating and whether this affected the illegal exaction claim. The Claims Court reaffirmed the initial holding that NAHASDA was money mandating, but found that an illegal exaction claim was unsupported because the procedural elements of NAHASDA were not money mandating. The government then sought certification for interlocutory appeal regarding the issue of jurisdiction, and the Tribes sought reconsideration on the illegal exaction holding. The Claims Court denied reconsideration. The Tribes appealed to the Federal Circuit.
Questions Presented: First, whether these provisions of NAHASDA are money mandating, giving the Federal Circuit Court subject matter jurisdiction. Second, whether the procedural violations of the government’s actions rise to an illegal exaction claim.
Holdings: The Federal Circuit held that NAHASDA is not money mandating because a “simple money judgment” would not be an appropriate remedy and because the funds that are mandated by the statute are restricted in nature. As such, the court does not have subject matter jurisdiction to hear this case under the Tucker or Indian Tucker Acts. On the second issue, the court held that the procedural failures did not result in an illegal exaction because illegal exactions must derive from property taken from a claimant, not funds unawarded.
Reasoning: A statute is money mandating in one of two ways – first, it may be written in such a way that it can “fairly be interpreted as mandating compensation by the Federal Government for . . . damages sustained;” or, second, it may expressly or implicitly grant the claimant the right to recover damages. See Blueport Co., LLC v. United States, 533 F.3d 1374, 1383 (Fed. Cir. 2008) (quoting United States v. Mitchell, 463 U.S. 206, 216-17 (1983) (internal quotation marks omitted)). The court reasoned that NAHASDA, on the other hand, mandates reimbursement of an equitable nature. The court relied on National Center for Manufacturing Sciences v. United States, 114 F.3d 196 (Fed. Cir. 1997) which provides two points that are relevant to the case at hand – that “simple money damages” would not be appropriate, and that the use of funds is restricted and is a product of a cooperative and ongoing relationship. See Id., 114 F.3d at 201.
In the present case, the court reasoned that NAHASDA does not authorize the Tribes to receive actual payment of money damages; rather, it provides for strings-attached grant funding. There are restrictions on what the Tribes can do with money received through NAHASDA, and the disbursement of these funds cannot be labeled as damages. While the Tucker Act does provide a venue to obtain equitable relief, this is only when such relief is ancillary to an underlying claim for monetary relief.
The Tribes also argued that the alleged procedural failures resulted in an illegal exaction, but the court found this argument unpersuasive. An illegal exaction must include property taken away from the claimant, not money merely left unawarded to the claimant, as it was in this case. See Norman v. United States, 429 F.3d 1081, 1095 (Fed. Cir. 2005). The Federal Circuit Court therefore rejected the illegal exaction claim and found there was no jurisdiction.
After concluding its reasoning in the case, the court expressed its misgivings with the government’s actions and stances in this case and related litigation. In Modoc Lassen Indian Housing Authority v. United States Department of Housing and Urban Development, 864 F.3d 1212, 2017 WL 3140877 (10th Cir. July 25, 2017), the government took essentially the opposite position. In Modoc, the government argued that the return of overpaid funds from the government to tribes under NAHASDA did, in fact, constitute money damages. Id. at 1217. This meant that the payment of money damages was protected against through 5 U.S.C. § 702. Id. at 1225. The Tenth Circuit in Modoc ultimately agreed with the government’s position in that case and found that awarding “money damages” through NAHASDA would violate § 702. Id. at 1225. The Federal Circuit noted the inconsistencies in the government’s arguments in these two cases in its opinion, but ultimately found the government’s present argument, that the NAHASDA statute does not bring forth a case for Tucker Act damages, to be persuasive. It vacated and dismissed the case for lack of subject matter jurisdiction.