Cook Inlet Tribal Council, Inc. v. Christopher Mandregan ( 2021 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 13, 2021 Decided August 24, 2021
No. 19-5005
COOK INLET TRIBAL COUNCIL, INC.,
APPELLEE
v.
EVANGELYN DOTOMAIN, DIRECTOR, ALASKA AREA OFFICE,
U.S. INDIAN HEALTH SERVICE, ET AL.,
APPELLANTS
Consolidated with 20-5192
Appeals from the United States District Court
for the District of Columbia
(No. 1:14-cv-01835)
John S. Koppel, Attorney, U.S. Department of Justice,
argued the cause for appellants. With him on the briefs were
Jeffrey Bossert Clark, Acting Assistant Attorney General at the
time the brief was filed, and Daniel Tenny, Attorney. Derek S.
Hammond and R. Craig Lawrence, Assistant U.S. Attorneys,
entered appearances.
2
Rebecca A. Patterson argued the cause for appellee. With
her on the brief were Lloyd B. Miller and Whitney A. Leonard.
Before: HENDERSON, KATSAS and WALKER, Circuit
Judges.
Opinion for the Court filed by Circuit Judge WALKER.
WALKER, Circuit Judge: Cook Inlet Tribal Council runs
an alcohol recovery program under a self-determination
contract with Indian Health Service. The Council says its
increased facility costs qualify as contract support costs
pursuant to 25 U.S.C. § 5325(a).
We disagree.
I
Cook Inlet Tribal Council represents eight federally
recognized tribes in Alaska. In 1992, it opened an alcohol
recovery center in Anchorage. The program started with a
residential treatment center but expanded over the years to
include several outpatient facilities.
The Council runs its recovery program through a contract
with Indian Health Service under the Indian Self-
Determination and Education Assistance Act. 25 U.S.C.
§ 5321. The Act authorizes tribes to provide health services
otherwise run by the government. In exchange, the
government pays for the program. See Menominee Indian
Tribe of Wisconsin v. United States, 577 U.S. 250, 252 (2016)
(“tribes may enter into ‘self-determination contracts’ with
federal agencies to take control of a variety of federally funded
programs”).
3
The Act requires the government to reimburse contracting
tribes for two categories of health care expenses. First, Indian
Health Service must pay the secretarial amount — a negotiated
sum that can’t be less than what Indian Health Service would
have spent on the program if it directly provided the health
care. 25 U.S.C. § 5325(a)(1); see Salazar v. Ramah Navajo
Chapter, 567 U.S. 182, 186 (2012); see also Menominee Indian
Tribe of Wisconsin, 577 U.S. at 252 (“A contracting tribe is
eligible to receive the amount of money that the government
would have otherwise spent on the program . . . .”).
Second, Indian Health Service must pay for contract
support costs. Pub. L. No. 100-472, § 205, 102 Stat. 2285,
2292-94 (1988) (codified at 25 U.S.C. § 5325). These funds
reimburse tribes for contract compliance expenses Indian
Health Service doesn’t incur (and therefore doesn’t pay) when
it runs the program. In general, contract support costs cover
expenses not contemplated by the secretarial amount, like
workers’ compensation premiums and some overhead
expenses. 25 U.S.C. § 5325(a)(2)–(3); Cherokee Nation of
Oklahoma v. Leavitt, 543 U.S. 631, 635 (2005). With the
secretarial amount and the added contract support costs, the
government is required to fully fund the contracted-for health
program run by a tribe.
In 1992, Indian Health Service agreed to pay the Council
$150,000 to run the alcohol recovery program. Of that total,
$11,838.50 paid for facility costs. The Council and the
government agreed that those facility costs — which included
rent and a partial salary for a facilities coordinator — were
expenses Indian Health Service would have incurred if it ran
the recovery center. So Indian Health Service paid the facility
costs from the secretarial amount.
4
The record does not show how much the Council received
for facility costs in 2014. It does, however, show an
approximately thirteen-fold increase in total funding since
1992. In 2014, the Council received approximately $2,000,000
from Indian Health Service.
In 2014, the Council proposed amending the contract to
add more than $400,000 in annual facility costs. The Council
insisted these funds be paid as contract support costs to
supplement any secretarial funds already going towards facility
costs. For reasons unexplained to this court, the Council did
not request an increase in the annual secretarial amount to
cover the unfunded facility costs.
The Council sued Indian Health Service after it denied the
Council’s proposal, and the district court awarded judgment to
the Council.
The district court began by finding ambiguity in the
statutory provision defining contract support costs. Cook Inlet
Tribal Council v. Mandregan, 348 F. Supp. 3d 1, 9-12 (D.D.C.
2018) (citing 25 U.S.C. § 5325(a)(2)). It then applied the
Indian Canon to construe that purported ambiguity in favor of
the Council, holding that its facility costs could be contract
support costs. 348 F. Supp. 3d at 12. It later ordered Indian
Health Service to pay $302,000 to the Council. Cook Inlet
Tribal Council v. Mandregan, No. 1:14-cv-1835 (D.D.C. Apr.
29, 2020) (order).
The government appeals. We have jurisdiction, 28 U.S.C.
§ 1291, and our review is de novo. Stoe v. Barr, 960 F.3d 627,
629 (D.C. Cir. 2020).
5
II
The Indian Self-Determination and Education Assistance
Act does not require the government to pay contract support
costs for expenses Indian Health Service normally pays when
it runs a health program. Those expenses are eligible for
reimbursement only under the secretarial amount. Because the
facility costs here are expenses normally incurred by the
agency, we reverse the district court.
A
As in all cases of statutory interpretation, we start with the
controlling statute’s text. Van Buren v. United States, 141 S.
Ct. 1648, 1654 (2021). That brings us to 25 U.S.C.
§ 5325(a)(2), which defines contract support costs. It states, in
part:
There shall be added to [the secretarial amount]
contract support costs which shall consist of
an amount for the reasonable costs for activities
which must be carried on by a tribal
organization as a contractor to ensure
compliance with the terms of the contract and
prudent management, but which —
(A) normally are not carried on by the
respective Secretary in his direct
operation of the program. . . .
25 U.S.C. § 5325(a)(2)(A) (emphases added).1
1
The parties don’t discuss § 5325(a)(2)(B). See id. (adding costs for
activities which “are provided by the Secretary in support of the
contracted program from resources other than those under contract”).
6
Put more succinctly, the government must pay contract
support costs for the “activities” required by the contracted-for
program — but only if those activities “normally are not carried
on by” the government agency that would otherwise operate
the program. That’s because normal expenses are already
reimbursed under the secretarial amount. Id. § 5325(a)(1).
The “activities” in this case concern the provision of
facilities. In 1992, that included rent and part of the salary of a
facilities coordinator. If the agency normally incurs these costs
when it runs a program, those costs are not contract support
costs.
Here, it is self-evident that the agency normally pays for
space and staff when it runs a health care center, especially one
with in-patient services. Whether or not a health center is
government-run, patients need a place to be treated. And they
need medical and support staff to treat them and maintain the
space. The staff, in turn, needs a place to work. And at the risk
of belaboring the obvious, all of the above — staff, workspace,
and patient rooms — costs money whether or not the program
is government-run.
Perhaps some exceptions or nuances may arise in other
cases, but those are not at issue here. The Council itself
considered the facility costs within the secretarial amount when
it first entered into its contract with the government in 1992.2
2
The Council says that some categories of expenses will cost more
for a tribe to provide than the government, and that contract support
costs are intended to cover this difference. See Appellee’s Br. 44
n.17; Oral Arg. Tr. 18-19. But that’s not this case. The Council has
directed us to no evidence that any of the facility costs here — in
particular, rent and salaries — would cost more for the Council to
7
B
On appeal, the Council attempts to escape the limits of
§ 5325(a)(2) by relying on § 5325(a)(3). But § (a)(3) does not
expand the types of contract support costs made available to
tribes by § (a)(2). Instead, § (a)(3) merely divides into two the
contract support costs already defined by § (a)(2).3
provide. We thus need not consider whether cost differentials of the
sort flagged by the Council may be addressed as contract support
costs under § 5325(a)(2) or in negotiations over the secretarial
amount under § 5325(a)(1).
3
Sections 5325(a)(1), (a)(2), and (a)(3)(A) provide:
(1) The amount of funds provided under the terms
of self-determination contracts entered into pursuant
to this chapter shall not be less than the appropriate
Secretary would have otherwise provided for the
operation of the programs or portions thereof for the
period covered by the contract, without regard to
any organizational level within the Department of
the Interior or the Department of Health and Human
Services, as appropriate, at which the program,
function, service, or activity or portion thereof,
including supportive administrative functions that
are otherwise contractable, is operated.
(2) There shall be added to the amount required by
paragraph (1) contract support costs which shall
consist of an amount for the reasonable costs for
activities which must be carried on by a tribal
organization as a contractor to ensure compliance
with the terms of the contract and prudent
management, but which —
8
Specifically, § (a)(3) divides contract support costs into
“direct program expenses,” 25 U.S.C. § 5325(a)(3)(A)(i), and
“any additional administrative or other expense incurred” in
operating the program, id. § 5325(a)(3)(A)(ii). Direct expenses
include contract support costs like “workers’ compensation and
unemployment taxes.” Swinomish Indian Tribal Community v.
Becerra, 993 F.3d 917, 918 (D.C. Cir. 2021). Indirect expenses
include contract support costs like “audits and computer
(A) normally are not carried on by the respective
Secretary in his direct operation of the program; or
(B) are provided by the Secretary in support of the
contracted program from resources other than
those under contract.
(3)(A) The contract support costs that are eligible
costs for the purposes of receiving funding under
this chapter shall include the costs of reimbursing
each tribal contractor for reasonable and allowable
costs of —
(i) direct program expenses for the operation of the
Federal program that is the subject of the contract;
and
(ii) any additional administrative or other expense
incurred by the governing body of the Indian Tribe
or Tribal organization and any overhead expense
incurred by the tribal contractor in connection with
the operation of the Federal program, function,
service, or activity pursuant to the contract,
except that such funding shall not duplicate any
funding provided under subsection (a)(1) of this
section.
9
systems.” Id.; see also Cherokee Nation of Oklahoma v.
Leavitt, 543 U.S. 631, 635 (2005) (indirect expenses may
include “special auditing or other financial management
costs”).
But nothing about § (a)(3) changes the limits on contract
support costs provided by § (a)(2). An expense can be neither
a direct contract support cost nor an indirect contract support
cost if it is not, as defined by § (a)(2), a contract support cost.
And under § (a)(2), no expense is a contract support cost if it —
like facility costs — is “normally” paid by the agency that
would otherwise administer the program directly. See FDA v.
Brown & Williamson Tobacco Corp., 529 U.S. 120, 133 (2000)
(“A court must . . . interpret the statute as a symmetrical and
coherent regulatory scheme, and fit, if possible, all parts into
an harmonious whole.”) (cleaned up). Moreover, the word
“allowable” in § (a)(3) reinforces this point. 25 U.S.C.
§ 5325(a)(3)(A). By its terms, § (a)(3) includes “reasonable
and allowable costs of” direct program expenses and additional
administrative or overhead expenses. Id. If “allowable”
simply meant allowable under § (a)(3), the word would do
nothing. So “allowable” must mean allowable under some
other law besides § (a)(3). It thus means allowable under
§ (a)(2), which is the nearest reasonable referent.
The Council says this reading renders superfluous the non-
duplication provision in § (a)(3), which says contract support
costs “shall not duplicate any funding provided under
subsection (a)(1) of this section [i.e., the secretarial amount].”
Id. § 5325(a)(3)(A). But it’s far more faithful to the statutory
scheme to view § (a)(3)’s non-duplication provision as
reinforcing the rest of the statute in a belt-and-suspenders
manner, rather than writing § (a)(2)’s “normally” provision
completely out of the statute — as the Council’s approach
10
requires — and replacing the “normally” provision with an
understanding that allows its exact opposite.
The Council fears today’s result will allow the government
to underfund tribal health programs. But when a tribe contracts
to run a program that an agency would otherwise provide, the
agency remains bound to pay (1) what it would have paid, and
(2) contract support costs for necessary expenses the agency
would not “normally” incur. Id. § 5325(a)(2)(A). If a tribe’s
secretarial amount does not cover the same facility costs
“normally” incurred by the agency, the tribe’s recourse is
simple: Sue for a larger secretarial amount.
* * *
The district court held that the Council’s facility costs are
contract support costs. Because they are not, we reverse the
district court’s order granting summary judgment to the
Council, vacate the court’s judgment awarding the Council
$302,000, and remand for entry of judgment to Indian Health
Service.