SUBJECT: St. Regis Mohawk Tribe

FINAL DECISION ON REVIEW OF

ADMINISTRATIVE LAW JUDGE DECISION

The Indian Health Service (IHS) appealed an October 23, 2001 Recommended Decision by Administrative Law Judge (ALJ) Marcel S. Greenia granting the St. Regis Mohawk Tribe (St. Regis) Motion for Summary Judgment and denying a similar Motion by IHS. St. Regis Mohawk Tribe v. Area Director, Nashville Area Indian Health Service (ALJ Decision). The issue before the ALJ was whether IHS' partial declinations of St. Regis' proposed Annual Funding Agreements (AFAs) for calendar years 1999 - 2001⁽¹⁾ were appropriate under the Indian Self-Determination Act (ISDA), 25 U.S.C. § 450f et seq. IHS declined to pay St. Regis' Headquarters tribal share for the last three months covered by each AFA as part of a lump-sum payment at the beginning of the calendar year, and instead paid this amount at a later date out of the appropriations for the next fiscal year. The ALJ found that IHS was required to provide all funds for each AFA in a lump-sum payment at the beginning of the calendar year, in effect reversing IHS' partial declination.

Based on the analysis below, I affirm the ALJ Decision.

Statutory Background

IHS, an agency of the United States Department of Health and Human Services (HHS), provides primary health care for American Indians and Alaskan Natives. IHS Headquarters provides nationwide support for all IHS programs. IHS' 12 Area Offices provide administrative support for health care programs in a designated IHS Area.

The ISDA directs the Secretary of HHS to award "self-determination" contracts to tribal organizations to provide programs, functions, services and activities (PFSAs) for the benefit of Indians that had previously been provided by IHS. 25 U.S.C. § 450f(a)(1). A tribal organization may also contract to take over certain "supportive administrative functions" for those PFSAs which were carried out by IHS Headquarters and the Area Office. 25 U.S.C. § 450j-1(a)(1).

Section 450f(a)(2) provides that the Secretary must approve a tribal organization's proposal for a self-determination contract unless the Secretary makes one of five specific findings, only one of which is relevant here: the Secretary may decline a proposal to renew a contract on the ground that the amount of funds requested exceeds the applicable funding level for the contract as determined under section 450j-1(a). 25 U.S.C.
§ 450f(a)(2)(D). In such cases, the Secretary is still required to "approve a level of funding authorized under section 450j-1(a)." 25 U.S.C. § 450f(a)(2). Section 450j-1(a) provides that the amount of funds awarded under a self-determination contract shall not be less than what would have been provided for the federal operation of the program covered by the contract. This is referred to as the "Secretarial Amount."

Section 450j-1(b)(2) provides that, once a self-determination contract has been awarded, the amount of funds awarded in subsequent years shall not be reduced except in certain specified circumstances, including "a reduction in appropriations from the previous fiscal year for the program or function to be contracted" and "a tribal authorization."

Section 450j-1(b)(5) provides in part that-

[n]otwithstanding any other provision in this Act, the provision of funds under this Act is subject to the availability of appropriations and the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under this Act."

In addition, section 450j(c)(1)(B) sets the term of self-determination contracts and states that the amount of a self-determination contract "shall be subject to the availability of appropriations."

Funding for self-determination contracts is provided through AFAs. Section 450j(d) provides:

(1) Beginning in fiscal year 1990, upon election of a tribal organization, the Secretary shall use the calendar year as the basis for any contracts or agreements . . . unless the Secretary and the Indian tribe or tribal organization agree on a different period.

(2) The Secretary shall, on or before April 1 of each year beginning in 1992, submit a report to the Congress on the amounts of any additional obligation authority needed to implement this subsection in the next following fiscal year.

The legislative history explained this provision as follows:

Section . . . [450j(d)] authorizes the Secretary to begin using the calendar year as the annual timeframe for agreements and contracts under the . . . [ISDA] except where the Secretary and the tribal organization agree on a different period. Many tribal contractors have experienced considerable problems with cash flow at the beginning of the [Federal] fiscal year due to the problem of delays in the enactment of annual appropriations legislation and the consequent delays in allocating funding to the Federal agencies and the tribes. Most of the problems occur during the first quarter of the Federal fiscal year, e.g., October through December. Many tribes have been forced by delays in placing contract awards on the letter of credit system to borrow from commercial banks in order to maintain program operations. Routinely, tribes have been unsuccessful in recovering interest costs necessitated from the Federal agencies. . . .

S. Rep. No. 100-274 at 30, 100^th Cong., 2d Sess. (1987), reprinted in 1988 U.S.C.C.A.N. 2620 at 2649.

Section 450l(b) provides that "[n]otwithstanding any other provision of law, the Secretary may make payments pursuant to section 1(b)(6) of [the Model Agreement described in section 450l(c)]." The Model Agreement provides in pertinent part:

(B) QUARTERLY, SEMIANNUAL, LUMP-SUM, AND OTHER METHODS OF PAYMENT. -

(i) IN GENERAL. -- . . . for each fiscal year covered by this Contract, the Secretary shall make available to the Contractor the funds specified for the fiscal year under the annual funding agreement . . . by paying to the Contractor, on a quarterly basis, one-quarter of the total amount provided for in the annual funding agreement for that fiscal year, in a lump-sum payment or as semiannual payments, or any other method of payment authorized by law, in accordance with such method as may be requested by the Contractor and specified in the annual funding agreement.

(ii) METHOD OF QUARTERLY PAYMENT. -- If quarterly payments are specified in the annual funding agreement . . ., each quarterly payment made pursuant to clause (i) shall be made on the first day of each quarter of the fiscal year, except that in any case in which the Contract year coincides with the Federal fiscal year, payment for the first quarter shall be made not later than the date that is 10 calendar days after the date on which the Office of Management and Budget apportions the appropriations for the fiscal year for the programs services, functions, and activities subject to this Contract.

A tribal organization whose contract proposal has been declined is entitled to a hearing on the record. 25 U.S.C. § 450f(b)(3). The Secretary has the burden of proof to clearly demonstrate the validity of the grounds for declining the contract proposal. 25 U.S.C. § 450f(e)(1).

Factual Background

St. Regis is a federally recognized "tribal organization" served by the Nashville Area Office (NAO). St. Regis has negotiated calendar year contracts since 1995 and has requested its Secretarial Amount in a single, lump-sum payment since 1994.

St. Regis negotiated an AFA with IHS for calendar year 1997⁽²⁾ which provided St. Regis with a lump-sum payment at the beginning of 1997. In 1998, St. Regis negotiated a modification to the 1997 AFA, extending that contract from January 1, 1998 through March 31, 1998. At the beginning of 1998, IHS paid St. Regis a lump-sum amount for the period January 1 - March 31.

While negotiating the 1998 AFA for the period April 1 through December 31, 1998, St. Regis requested a lump-sum payment to be paid at the beginning of the contract period, April 1, 1998. IHS paid St. Regis a prorated, single, lump-sum payment equal to the Area Office tribal share due for the remaining nine months of 1998.

However, IHS insisted that the 1998 Headquarters tribal share be paid in two installments, the first from Federal fiscal year (FY) 1998 appropriations and the second from FY 1999 appropriations. The first payment would be made at the beginning of the contract period (April 1, 1998) and cover the remainder of the Federal fiscal year (through September 30, 1998). The second payment would be made October 1, 1998 and cover the last three months of 1998. St. Regis did not object at that time.

In December 1998, St. Regis submitted its proposed 1999 AFA, which totaled $4,633,131. IHS declined the proposed AFA with respect to the Headquarters tribal share on the premise that it exceeded the applicable funding level for the contract period under 25 U.S.C. § 450f(a)(2). In January 1999, NAO made a lump-sum payment of the Area Office tribal share to St. Regis.

However, IHS paid the Headquarters tribal share in two installments, the first within 15 days of January 1, 1999 and the second within 21 days of the Office of Management and Budget apportionment to IHS following the FY 2000 appropriations being signed into law (which the ALJ stated and IHS did not dispute was received by St. Regis by October 21, 2000).

On March 30, 2000, IHS partially declined St. Regis' 2000 AFA requesting a single, lump-sum payment covering twelve months of the Headquarters tribal share. IHS again declined to pay three months of the Headquarters tribal share, asserting that the funding requested under the AFA exceeded the funding available.

IHS issued another partial declination on February 5, 2001, for St. Regis' 2001 AFA. Again, St. Regis requested twelve-month funding and again IHS declined to pay three months of the Headquarters tribal share, asserting that the requested funding exceeded the applicable funding level available. Rather, IHS proposed to pay these funds at the start of FY 2002.

The ALJ Decision

The ALJ in effect reversed the partial declination. The ALJ determined that the requirement in the Model Agreement that the Secretary make available to a tribal organization "the funds specified for the fiscal year under the annual funding agreement" did not refer to the federal fiscal year (October 1 to September 30). ALJ Decision at 7. The ALJ found that, as a result of IHS' "forward funding policy" based on a contrary reading, "tribes like St. Regis, whose contracts are scheduled on a 12 month calendar year, are denied the interest on the full contract funding and are held hostage to the uncertainties of the federal appropriations process." Id.⁽³⁾ The ALJ stated that this would undermine "the manifest legislative intent to provide the tribe the full measure of contract funding as expeditiously as possible." ALJ Decision at 7. The ALJ also rejected IHS' argument that providing the funds in one lump-sum payment would injure those tribes who choose not to contract with IHS. Id. In addition, the ALJ found that none of the statutory circumstances for a reduction in funding existed, noting that St. Regis has not given IHS permission to reduce its lump-sum funding and that there has not been a reduction in appropriations. Id. at 8. Moreover, the ALJ found that the ISDA specifically contemplated that IHS would request additional obligation authority to implement calendar year contracts, so that "IHS has the means . . . to request additional funding to accommodate the Tribe's request for CY lump-sum payments, including a one time, fifteen-month, payment." ALJ Decision at 7-9. Accordingly, the ALJ concluded that "to the extent IHS policy of funding the Tribe's self determination contract is consistent with the [ISDA] and to the degree that sufficient appropriations are made by Congress, IHS must provide in a lump-sum the amount of money negotiated in the Annual Funding Agreement including Headquarter tribal shares for a twelve month calender [sic] year for years 1999, 2000 and 2001." ALJ Decision at 10.

Below I find that the ALJ did not err in finding that IHS did not clearly demonstrate the validity of its declinations.

While IHS vigorously contends that the ISDA allows it to fund St. Regis' Headquarters Share via a nine-month lump-sum payment on January 1 and a three-month lump-sum payment on or about October 1, I agree with the ALJ that IHS' interpretation is inconsistent with the ISDA. The specific language of the statute at section 450j(d) leaves it up to the tribal organization to elect to proceed on a calendar year basis for the funding of its self-determination contracts. The legislative history makes the rationale for this provision (which was added to the statute in 1988) abundantly clear; it is designed to protect tribes against the cash flow problems that regularly occur at the start of the federal fiscal year "due to the problem of delays in the enactment of annual appropriations legislation and the consequent delays in allocating funding . . . during the first quarter of the Federal fiscal year." S. Rep. No. 100-274 at 30, supra.

The approach urged by IHS would have precisely the opposite effect from that which the legislation was intended to produce. Rather than being able to enter into the long-term contracts contemplated by Congress and the ISDA, St. Regis would continually be at the mercy of the congressional budget process for the last three months of its calendar year. It would not be reasonable for St. Regis, or any other tribe electing calendar year funding, to expect to face, on a regular basis, a funding process split over two Federal fiscal years. As the ALJ recognized, it is a well-recognized canon of the law that - "Statutes affecting Indian rights . . . should be liberally construed and `doubtful expressions [should be] resolved in favor of the Indians.'" ALJ Decision at 9 (quoting Yukon Flats School Dist. v. Native Village of Yenetie Tribal Gov't, 101 F.3d 1286, 1294 (9^th Cir. 1996), cert granted, 521 U.S. 1103 (1997), citing Alaska Pacific Fisheries Co. v. United States, 248 U.S. 78, 89 (1918)). Here, there is not even a "doubtful expression"; the desires and motivations of the legislators are made clear in both the language of the statute and the legislative history.

IHS' contention that the ALJ erroneously interpreted the word "fiscal" in his Recommended Decision is unpersuasive. The IHS interpretation - that "fiscal year", as used in the Model Agreement, refers to the Federal fiscal year, even though the contract provision in the statute referred to later uses the term "Federal fiscal year" - would render the calendar year funding option language of the statute meaningless. When Congress allowed tribes to use the calendar year as their funding basis, Congress was effectively allowing tribes to use the calendar year as their fiscal year, as opposed to the Federal fiscal year. I agree with St. Regis that the use of the contrasting terms, "fiscal year" and "Federal fiscal year" in the statute's Model Agreement section, is a classic example of expressio unius est exclusio alterius, particularly where, as here, the two terms are used so close together, and where an opposite interpretation would contravene the letter and spirit of the language authorizing lump-sum calendar year payments.

IHS' contention that the ALJ's decision -- by effectively forcing IHS to fund fifteen months during the course of a year where a tribe is in transition from a Federal fiscal year to a calendar year funding basis, or by generally appropriating funds over two Federal fiscal years to be paid on January 1 -- violates the Anti-Deficiency Act⁽⁴⁾ is likewise unconvincing. It is obvious to the undersigned that in allowing tribes to transition from a fiscal year beginning October 1 to a fiscal year coinciding with the calendar year, with tribes entitled to a one-year lump-sum payment, then there has to occur, on a one-time basis, the need for a transitioning tribe to receive fifteen months of payment in the transitional year. Such an approach would be the only way to give effect to the clear intent of Congress that a tribe could make this transition from the October 1 to January 1 fiscal year. Since Congress clearly intended that tribes electing to proceed on a calendar year basis would receive on January 1 payments overlapping the next Federal fiscal year, that fact alone indicates that Congress did not intend that the Anti-Deficiency Act would apply to obviate the express statutory language regarding these contracts. St. Regis has legitimately entered into a lawful contract with IHS as authorized by statute. See St. Regis Br. at 13 (citing Wetsel-Oviatt Lumber Co., Inc. v. U.S., 38 Fed. Cl. 563, 570 (1997)). In light of this fact as well as express language in the statute and legislative history, IHS' Anti-Deficiency argument fails.

Finally, IHS' contention that granting the relief requested would somehow injure other tribes appears to be an argument made without any basis. Compliance with an express and unambiguous statutory mandate takes precedence over what is at best a speculative showing of possible harm to unnamed tribes. There is undisputed evidence in the record that IHS has the ability to control and reprogram its funds, and the reprogramming that may be necessitated in this case has clearly been contemplated by Congress by its enacting of the provisions at issue in the first place.

Conclusion

Based on the foregoing analysis, I sustain the ALJ Decision in its entirety.

This is the final determination of the Department in this matter.

Marc R. Hillson

1. The original appeal involved a partial declination of the calendar year 1999 AFA. While that appeal was before the ALJ, IHS issued declinations for calendar years 2000 and 2001. Given their similar facts and identical legal basis, the ALJ consolidated the appeals.

2. Unless indicated otherwise, all further references to years are to calendar years.

3. The ISDA provides that tribal organizations are not accountable for the interest earned on funds advanced to them pending their disbursement by such organization. 25 U.S.C. § 450j(b).

4. The Anti-Deficiency Act, at 31 U.S.C. 1341(a)(1), prohibits an officer or employee of the United States from making or authorizing an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation.