June 18, 2012

Supreme Court Decides Salazar v. Ramah Navajo Chapter

On June 18, 2012, the U.S. Supreme Court decided Salazar v. Ramah Navajo Chapter et al., No. 11-551, holding that under the Indian Self-Determination and Education Assistance Act (ISDA), the government must pay every tribe's "self-determination" contract support costs in full. Under the ISDA, the Secretary of the Interior is directed to enter into contracts on the request of any tribe through which the tribes will provide services relating to "health, education, economic and social programs that the Secretary would otherwise have administered." The ISDA requires the Secretary to pay the "full amount" of "contract support costs" relating to each program covered by the contract. However, the ISDA also provides that "the provision of funds under [the ISDA] is subject to the availability of appropriations." The ISDA permits contractors to pursue "money damages" under the Contract Disputes Act.

During fiscal years 1994-2001, the respondent tribes entered into and fully performed program contracts under the ISDA. Although Congress authorized sufficient appropriations to cover any individual contractor's support costs, the appropriations covered only 77% to 92% of the collective support costs, depending on the year. Based on these appropriations, the Secretary paid tribes' contract support costs uniformly on a pro rata basis. The tribes sued for breach of contract under the Contract Disputes Act. The district court granted summary judgment in favor of the government. The Tenth Circuit reversed and held that the government is liable to each contractor for the full amount of the contract.

The Supreme Court affirmed, reasoning that the underlying principles from prior case law, including Cherokee Nation of Okla. v. Leavitt, and United States v. Ferris "dictate the result in this case." When "Congress has appropriated sufficient legally unrestricted funds to pay the contracts at issue, the Government normally cannot back out of a promise to pay 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." Requiring the government to pay the full amount "safeguards both the expectations of Government contractors and the long-term fiscal interests of the United States." The Court recognized the government's "frustration" with competing mandates—Congress has compelled the Secretary to accept every qualifying ISDA contract but has failed to appropriate sufficient funds to fully cover those costs—but "the dilemma's resolution is the responsibility of Congress."

Justice Sotomayor delivered the opinion of the Court, in which Justices Scalia, Kennedy, Thomas, and Kagan joined.  Chief Justice Roberts filed a dissenting opinion, in which Justices Ginsburg, Breyer, and Alito joined.

Download Opinion of the Court

The Faegre Baker Daniels website uses cookies to make your browsing experience as useful as possible. In order to have the full site experience, keep cookies enabled on your web browser. By browsing our site with cookies enabled, you are agreeing to their use. Review Faegre Baker Daniels' cookies information for more details.