UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ______________________________ ) COOK INLET TRIBAL COUNCIL, ) ) Plaintiff, ) ) v. ) Case No. 14-cv-1835 (EGS) ) CHRISTOPHER MANDREGAN, JR., ) et. al., ) ) Defendants. ) ______________________________)

MEMORANDUM OPINION

I. Introduction

Over twenty-five years ago, the Cook Inlet Tribal Council

(“CITC”) and the Indian Health Service (“IHS”) entered into a

self-determination contract pursuant to the Indian Self-

Determination and Education Assistance Act (“ISDEAA”). Under

this contract, CITC has operated substance abuse programs

serving Alaskan Native patients, while IHS provides federal

funding to CITC, allowing CITC to administer federal programs

and services that IHS would have otherwise provided. In 2014,

CITC proposed a contract amendment for additional “contract

support costs” funding to account for increased facility support

costs, among other costs. IHS declined CITC’s proposed amendment

in part, stating that CITC receives payment for facility support

costs as part of its annual “Secretarial” funding. CITC now

1 appeals IHS’ declination decision, bringing suit against

Christopher Mandregan, Jr., Alaska Area Director of IHS; Alex

Azar, 1 Secretary of the Department of Health and Human Services

(“HHS”); and the United States of America. At issue is whether

the ISDEAA clearly requires that CITC’s facility support costs

be funded exclusively from the Secretarial amount, or whether

CITC’s facility support costs may also be funded as contract

support costs.

Pending before the Court are the parties’ cross-motions for

summary judgment. Having carefully reviewed the motions and the

entire record herein, the Court concludes that CITC’s

interpretation of the ISDEAA’s ambiguous funding provision is

reasonable. Therefore, the Court GRANTS IN PART CITC’s motion

for summary judgment and DENIES the defendants’ cross-motion for

summary judgment. However, rather than “immediately” compel IHS

to approve and fund CITC’s proposed contract amendment, the

Court VACATES IHS’ declination decision and REMANDS the matter

to IHS for a determination consistent with this Memorandum

Opinion.

II. Background

This case arises out of a dispute regarding the ISDEAA’s

funding provisions. The ISDEAA authorizes the government and

1 Secretary Azar has been substituted pursuant to Federal Rule of Civil Procedure 25(d). 2 Indian tribes to enter into self-determination contracts,

pursuant to which tribes receive federal funding to provide

certain services that a federal agency would normally provide.

See

, et. seq. 2 The ISDEAA was designed—in

recognition of the country’s “obligation” “to respond to the

strong expression of the Indian people for self-determination”—

to “permit an orderly transition from the Federal domination of

programs for, and services to, Indians to effective and

meaningful participation by the Indian people in the planning,

conduct, and administration of those programs and

services.”

§ 5302(a), (b). Consistent with these aims, the

ISDEAA “direct[s]” the government to enter into and negotiate

self-determination contracts with Indian tribes upon tribal

request. Id. § 5321(a)(1). “Under a self-determination contract,

the federal government supplies funding to a tribal

organization, allowing [the tribe] to plan, conduct and

administer a program or service that the federal government

otherwise would have provided directly.” Rancheria v. Hargan,

(D.D.C. 2017) (quoting FGS

Constructors, Inc. v. Carlow,

(8th Cir.

1995)(quotation marks omitted).

2 The parties cite to

, et. seq., when referring to the ISDEAA. The ISDEAA has since been recodified. As such, all citations in this Memorandum Opinion reflect the statute’s current codification. 3 CITC challenges IHS’ decision to decline CITC’s proposed

contract amendment in part (“declination decision”). See Compl.,

ECF No. 1. IHS is an agency within HHS that provides primary

health care for American Indians and Alaskan Natives throughout

the United States. Defs.’ MSJ, ECF No. 15 at 8. 3 IHS provides

health care by several means, including directly through its own

facilities or by contracting with tribes and tribal

organizations pursuant to the ISDEAA.

.

CITC is a “private, non-profit corporation that delivers

social, education, employment, training, alcohol treatment,

child care, housing assistance, energy assistance and planning

services to the Alaska Native people of the Cook Inlet Region.”

A.R., 4 ECF No. 17-1 at 3. The services it provides to Native

Alaskans are funded by the federal government and the state of

Alaska.

CITC operates under the authority of its Board of

Directors, which is made up of representatives from eight

federally-recognized tribes: (1) the Chickaloon Village

3 When citing electronic filings throughout this Opinion, the Court cites to the ECF page number, not the page number of the filed document. 4 Pending before the Court are the defendants’ two motions to

enlarge and/or supplement the administrative record. See ECF Nos. 17, 20. CITC did not oppose the motions and in fact, attached some of the supplemental materials to its motion for summary judgment. See ECF No. 13, Exs. A-C. The Court therefore GRANTS the defendants’ motions to supplement the record. The Court considered all of the material on the docket in reaching its decision. 4 Traditional Council; (2) the Native Village of Eklutna; (3) the

Kenaitze Indian Tribe; (4) the Knik Tribal Council; (5) the

Ninilchik Traditional Council; (6) the Salamatof Tribal Council;

(7) the Seldovia Village Tribe; (8) and the Native Village of

Tyonek. See id.; Pl.’s Stmt., ECF No. 13-2 ¶ 1.

CITC has been a “tribal contractor” under the ISDEAA since

1992, Defs.’ Stmt., ECF No. 15-1 ¶¶ 1, 2, when it submitted a

proposal to IHS to enter into a self-determination contract to

provide residential treatment and recovery services at the

Alaska Native Alcohol Recovery Center, see A.R., ECF No. 17-2;

Pl.’s Stmt., ECF No. 13-2 ¶ 2. IHS accepted the proposal. Pl.’s

Stmt., ECF No. 13-2 ¶ 3. In the first year of the self-

determination contract, CITC was provided approximately $150,000

in Secretarial funding, which included $11,838.50 for facility-

related costs.

; see also A.R., ECF No. 17-2. Since

then, CITC’s programs have “expanded substantially . . . with

most funding coming from increases in congressional

appropriations.” Pl.’s Stmt., ECF No. 13-2 ¶ 5. Accordingly, its

funding increased from about $150,000 in 1992 to approximately

$2,000,000 in 2014, including the $11,838.50 IHS has paid

annually for facility support costs since 1992. See A.R., ECF

No. 11-1 at 2 ($1,943,226 as of April 2014); Pl.’s Stmt, ECF No.

13-2 ¶ 6 ($2,518,559).

5 By 2013, CITC’s facility support costs grew to $479,040,

including the $11,838.50 IHS has paid annually since 1992. Pl.’s

Stmt, ECF No. 13-2 ¶ 8. On April 11, 2014, CITC requested to

amend of its 2014 self-determination contract to add $479,040 in

“direct contract support costs associated with facility

support.” A.R., ECF No. 17-3. In its proposal, CITC argued that

its request should be approved because facility support funds

are “reasonable costs for activities which must be carried on by

CITC as a contractor” pursuant to the ISDEAA.

(citing

(a)(2)). On July 7, 2014, IHS denied CITC’s

proposal based on one of the five declination options

permissible under the ISDEAA: the amount CITC requested was “in

excess of the applicable funding level for the contract.” A.R.,

ECF No. 11-1 at 2-3 (citing

(a)(2)(D)). 5 In its

declination letter, IHS explained that facility support costs

were already included as part of CITC’s “program base,” or the

“Secretarial amount.”

The Secretarial amount is the funding

that “IHS would have spent for costs associated with its

programs” had it run the program itself.

(citing

(a)(1)). According to IHS, paying the requested $479,040 in

“direct contract support costs” would cause it to pay CITC for

5 IHS approved other costs as contract support costs, including training and certification costs, unemployment insurance, and workers’ compensation insurance and costs. Pl.’s Stmt., ECF No. 13-2 ¶ 10. 6 facility support costs twice, in violation of the ISDEAA. See

(citing

(a)(3)(A) (contract support costs

funding “shall not duplicate any funding” otherwise provided)).

CITC appealed this declination decision by filing a

complaint on October 31, 2014. Compl., ECF No. 1. The parties

filed cross-motions for summary judgment in 2015, which the

Court denied without prejudice while the parties engaged in

settlement negotiations. See Jan. 4, 2016 Minute Order. After

the negotiations failed, the Court granted the parties’ motions

to reinstate the cross-motions for summary judgment. See June 8,

2016 Minute Order.

III. Standard of Review

Pursuant to Federal Rule of Civil Procedure 56, summary

judgment should be granted “if the movant shows that there is no

genuine dispute as to any material fact and the movant is

entitled to judgment as a matter of law.” Fed. R. Civ.

P. 56(a); Waterhouse v. District of Columbia,

(D.C. Cir. 2002). CITC’s claim arises under the ISDEAA, not the

Administrative Procedure Act. As such, the Court’s review of

IHS’ declination decision is de novo. Pyramid Lake Paiute Tribe

v. Burwell,

(D.D.C. 2014); see also

Defs.’ MSJ, ECF No. 15 (not disputing that the Court’s review is

de novo).

7 When a tribe appeals a government agency’s declination

decision under the ISDEAA, as here, the burden of proof rests

with the government: “the Secretary shall have the burden of

proof to establish by clearly demonstrating the validity of the

grounds for declining the contract proposal (or portion

thereof).”

(e)(1). Therefore, IHS must “clearly

demonstrate” and make a “specific finding” that there exists one

of five permissible grounds to decline.

§ 5321(a)(2). In

other words, the government “must demonstrate that its reading

is clearly required by the statutory language.” Salazar v. Ramah

Navajo Chapter,

(2012)(quoting

). IHS must therefore clearly demonstrate that CITC’s

contract proposal for additional facility support costs was in

excess of the self-determination contract’s applicable funding

level.

(a)(2). To do so, IHS must establish that

facility support costs were included in CITC’s Secretarial

amount and to pay them again would violate the ISDEAA’s

prohibition against duplicative funding. See id.;

§

5325(a)(3)(A); see also A.R., ECF No. 11-1 at 2-3.

Additionally, the ISDEAA and the self-determination

contracts formed thereunder “shall be liberally construed for

the benefit of the [tribal] Contractor.” Ramah Navajo,

(quoting

). This canon of construction

has been codified in the ISDEAA, see

, and is

8 memorialized in the self-determination contract between IHS and

CITC, see A.R., ECF No. 11-1 at 14 § (a)(2) (“Each provision of

the Indian Self-Determination and Education Assistance Act and

each provision of this contract shall be liberally construed for

the benefit of the Contractor . . . .”); see also

(c) (model agreement codifying this provision); Montana v.

Blackfeet Tribe of Indians,

(1985) (when

cases involve American Indians, “statutes are to be construed

liberally in favor of the Indians, with ambiguous provisions

interpreted to their benefit”).

This canon displaces the deference a court would otherwise

give an agency’s interpretation under Chevron U.S.A., Inc. v.

Natural Resources Defense Council, Inc.,

(1984) in

a challenge brought pursuant to the Administrative Procedure

Act. See Cobell v. Norton,

(D.C. Cir. 2001)

(Because “the governing canon of construction” requires liberal

construction in favor of tribes, “Chevron deference is not

applicable in this case”). Therefore, when interpreting a

statute, a court must first determine whether the statutory text

is plain and unambiguous. Carcieri v. Salazar,

(2009). If so, the court “must apply the statute according to

its terms.”

If, on the other hand, the court determines the

statute to be ambiguous, the court need not give controlling

weight to an agency’s reasonable interpretation of that statute,

9 as it normally would under Chevron. See Muscogee (Creek) Nation

v. Hodel,

(D.C. Cir. 1988)(“[T]he standard

principles of statutory construction do not have their usual

force in cases involving Indian law.”). Instead, the court is to

give IHS’ views “consideration,” but not deference. Cobell,

; see also Rancheria,

(D.D.C. 2017)(summarizing “statutory interpretation and Chevron

deference in Indian law”); Maniilaq Ass'n v. Burwell,

(D.D.C. 2014) (“[T]he canon of construction in

favor of Indian tribes can trump the deference to agencies'

interpretations courts ordinarily give under Chevron and its

progeny . . . .”). Because “statutes are to be construed

liberally in favor of the Indians, with ambiguous provisions

interpreted to their benefit,” the Court must construe any

ambiguity or inconsistency in the ISDEAA or the self-

determination contract in CITC’s favor. Muscogee,

-45 (quoting Blackfeet Tribe,

).

IV. Analysis

IHS denied CITC’s contract proposal because the “amount of

funds proposed . . . is in excess of the applicable funding

level for the contract.” A.R., ECF No. 11-1 at 3. According to

IHS, CITC is not entitled to the requested facility support

funding because that funding has been included in CITC’s

“Secretarial amount.” See

The Secretarial amount is “the

10 amount that the IHS would have spent for costs associated with

its programs” under the ISDEAA.

Because the Secretarial

amount is capped at the amount IHS would have spent, IHS may

“decline any proposal seeking funds in excess of that amount.”

Maniilaq Ass'n, 170 F. Supp. 3d at 249 (citations omitted).

Although it has received $11,838.50 annually in facility support

costs since 1992, CITC argues that its increasing facility

support costs have not been funded in the Secretarial amount.

See generally Pl.’s MSJ, ECF No. 13. Therefore, CITC contends

that such costs must be provided as eligible “contract support

costs.” Id. IHS responds that CITC’s Secretarial amount has

steadily increased to almost $2 million in 2014 to “account for

inflation and rising costs of operating” Indian programs. Defs.’

MSJ, ECF No. 15 at 6. It contends that this amount includes

funding for increased facility support costs. Id. CITC replies

that IHS has provided no evidence to support that it provided

increased facility support costs beyond the $11,838.50 paid

annually since 1992; therefore, it argues that IHS failed to

meet its burden under the ISDEAA. Pl.’s Reply, ECF No. 18 at 16.

At issue, then, is whether the ISDEAA clearly requires that

CITC’s facility support costs be funded exclusively from the

Secretarial amount, or whether CITC’s facility support costs may

also be funded as contract support costs. See generally Pl.’s

MSJ, ECF No. 13; Defs.’ MSJ, ECF No. 15. In reaching its

11 decision, the Court first discusses the ISDEAA’s statutory

scheme and the two types of funding provided thereunder. The

Court then evaluates whether the statute speaks clearly on the

precise question. Concluding that it does not, the Court finds

CITC’s interpretation of the ambiguous statutory provision to be

reasonable, particularly in light of IHS’ contradictory

guidance, which contemplates that facility support costs may be

paid as contract support costs in certain circumstances.

Similarly, the Court finds that IHS’ interpretation is not

compelled by the ISDEAA and may in fact be contradicted by its

own regulations and guidance.

A. The Indian Self-Determination and Education Assistance Act

Congress enacted the ISDEAA in 1975 to codify the federal

government’s “obligation” to “respond to the strong expression

of the Indian people for self-determination” and to achieve

“maximum Indian participation in the direction of educational as

well as other Federal services to Indian communities so as to

render such services more responsive to the needs and desires of

those communities.”

(a). To that end, the Act

mandates that IHS must “upon the request of any Indian tribe . .

. enter into a self-determination contract . . . to plan,

conduct, and administer” health, education, economic, and social

programs that the Secretary otherwise would have administered.

§ 5321(a); see also Salazar v. Ramah Navajo Chapter, 567

, 186 (2012). Once the self-determination contract has

been executed, the government must pay the tribe’s costs to run

the program that it would have otherwise administered. See

. The ISDEAA provides for two types of funding: (1)

“Secretarial” amount funding, pursuant to § 5325(a)(1); and (2)

“contract support costs” funding, pursuant to § 5325(a)(2), (3).

The Secretarial amount is “the amount that the agency would

have spent ‘for the operation of the program’ had the agency

itself managed the program.” Cherokee Nation of Okla. v.

Leavitt,

(2005)(quoting

(a)(1)); see also Arctic Slope Native Ass’n, Ltd. v.

Sebelius,

(Fed. Cir. 2010) (“The

[S]ecretarial amount is the amount the Secretary would have

expended had the government itself run the program.”), vacated

on other grounds,

(2012). The Secretarial amount

“shall not be less than [the amount] the appropriate Secretary

would have otherwise provided for the operation of the programs

. . . covered by the contract, without regard to the

organizational level” within the relevant agency “at which the

program . . . , including supportive administrative functions

that are otherwise contractible, is operated.”

(a)(1). The statute does not provide examples of types of

costs that are included in the Secretarial amount.

13 As originally enacted, the ISDEAA only required the

government to provide Secretarial funding, equivalent to the

amount that the Secretary would have otherwise provided. Ramah

Navajo,

(discussing § 106(h),

).

However, “it soon became apparent that this [S]ecretarial amount

failed to account for the full costs to tribes of providing

services.”

For example, the Secretarial amount “does not

include the additional indirect costs that the tribes incur in

their operation of the programs, which the Secretary would not

have directly incurred (i.e., the cost of the administrative

resources that the Secretary could draw from other government

agencies).” Arctic Slope,

. Therefore, in 1988,

“because of ‘concern with Government’s past failure to

adequately reimburse tribes’ indirect administrative costs,’

Congress amended [the ISDEAA] to require the Secretary to

contract to pay the full amount of contract support costs

related to each self-determination contract.” Ramah Navajo,

(quoting Cherokee Nation,

)

(quotations to the statute omitted).

Under the ISDEAA, contract support costs “shall be added”

to the Secretarial amount.

(a)(2). Contract

support costs are defined as:

an amount for the reasonable costs for activities which must be carried on by a tribal organization as contractor to ensure

14 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; or (B) are provided by the Secretary in support of the contracted program from resources other than those under the contract.

These costs “include overhead administrative costs, as well

as expenses such as federally mandated audits and liability

insurance.” Ramah Navajo,

. Unlike the

Secretarial amount provision, the statute provides further

insight into the type of costs that may be eligible for contract

support costs funding:

The contract support costs that are eligible costs for the purposes of receiving funding under this chapter shall include 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 related to the overhead 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 [the Secretarial amount].

(a)(3)(A); see also Cherokee Nation,

(describing contract support costs as defined in the

statute).

15 Whether a cost or “activity” is included in the Secretarial

amount or is eligible as a contract support cost is significant

because the ISDEAA obligates IHS to fully fund contract support

costs. See Ramah Navajo,

(holding that the

government “cannot back out of its contractual promise to pay

each Tribe’s full contract support costs”). On the other hand,

IHS is only obligated to provide Secretarial funding in an

amount not less than the Secretary would have otherwise

provided.

(a)(1). Thus, the amount of

Secretarial funding provided is committed to agency discretion.

Defs.’ MSJ, ECF No. 15 at 13 (citing Quechan Tribe of the Ft.

Yuma Indian Res. v. United States, Case No. 11-16334, slip op.

at 3 (9th Cir. Apr. 1, 2015)).

CITC requested $479,040 in contract support costs funding

for its facility support costs in a proposal to amend the 2014

self-determination contract. A tribe may propose to amend a

self-determination contract by, for example, amending a funding

agreement. See

(a)(2). The government “shall”

approve a proposal to amend a self-determination contract

“unless the Secretary provides written notification to the

applicant that contains a specific finding that clearly

demonstrates” that one of five declination criteria or

conditions have been met. Id.; see also

(IHS

Regulation: “What is the Secretary required to do if the

16 Secretary decides to decline all or a portion of a proposal?”).

If an agency declines the proposal, the tribe may initiate an

action in a federal district court.

(b)(3). If

the district court concludes that the agency has not clearly

demonstrated a valid ground to decline, the court may order

appropriate relief including “money damages, injunctive relief .

. . , mandamus to compel an officer or employee of the United

States, or any agency thereof, to perform a duty . . .

(including immediate injunctive relief to reverse a declination

finding . . . or to compel the Secretary to award and fund an

approved self-determination contract).”

§ 5331(a).

B. Section 5325 of the ISDEAA is Ambiguous

As stated by IHS, “this case raises a novel issue about

what activities, and the associated costs, are eligible for

[contract support costs] funding under the ISDEAA.” Defs.’ MSJ,

ECF No. 15 at 13. The Court must determine whether the ISDEAA

clearly requires that CITC’s facility support costs be funded

exclusively from the Secretarial amount, or whether they may

also be funded as contract support costs.

IHS argues that the “plain language” of the ISDEAA

“authorizes [contract support costs] funding only for activities

normally not carried on by the Secretary . . . but that tribes

must carry on to ensure compliance with the terms of the

contract and prudent management.” Id. at 25. Therefore, IHS

17 argues that facility support costs are not eligible for contract

support costs funding because “facility activities, and the

corresponding costs, are [a program, function, service, or

activity] that the IHS would normally carry out and incur if it

was managing a facility.” Id. at 5. Therefore, because IHS would

“normally” pay for facility support costs, the ISDEAA “makes

clear” that those costs must constitute Secretarial funding. Id.

at 20; see id. 7, 15-16. According to IHS, CITC is impermissibly

attempting to supplement its Secretarial amount by

“recharacterizing” facility support costs as contract support

costs. Id. at 20.

CITC responds that facility support costs are eligible to

be funded both as Secretarial funding, as a portion of them have

been since 1992, and as contract support costs because they are

“reasonable and allowable costs” required for the operation of

the program. Pl.’s MSJ, ECF No. 13-1 at 1 (quoting

(a)(3)(A)). Because a tribal contractor “must ensure it has

adequate space to provide the services required by the

contract,” CITC argues that facility support costs are necessary

“to ensure compliance with the terms of the [self-determination]

contract and prudent management.”

at 12 (quoting

(a)(2)). CITC disputes that it is attempting to

impermissibly expand its Secretarial funding. Pl.’s Reply, ECF

No. 18 at 14-15. Instead, it contends that its facility support

18 cost funding has never increased from the original $11,838.50

provided in the Secretarial amount since 1992, despite its

expanded treatment programs.

; Pl.’s MSJ, ECF No.

13-1 at 19.

First, the Court must determine whether the provision at

issue is ambiguous. If the statute is ambiguous, the Court must

construe the ambiguities in CITC’s favor. See Chickasaw Nation

v. United States,

(2001) (holding that the

tribal cannon must yield when the tribe’s interpretation would

“conflict with the intent embodied in the statute Congress

wrote”). “Generally, a statute’s text is only ambiguous if,

after ‘employing traditional tools of statutory construction,’ a

court determines that Congress did not have a precise intention

on the question at issue.” Al-Bihani v. Obama,

(D.C. Cir. 2010) (quoting Chevron,

n. 9). The

Court must therefore ask whether “Congress has directly spoken

to the precise question at issue”—whether facility support costs

must be exclusively funded from the Secretarial amount—such that

its intent is “clear.” Chevron,

.

The ISDEAA does not clearly answer whether facility support

costs may be provided only in the Secretarial amount, pursuant

to

(a)(1), or whether they may also be eligible

as contract support costs, pursuant to subsections 5325(a)(2),

(3). The statute states that the Secretarial amount includes

19 funding that the “appropriate Secretary would have otherwise

provided for the operation of the programs or portions thereof

for the period covered by the contract.”

(a)(1).

The statute does not provide examples of activities included in

the Secretarial amount. See

Conversely, the statue states

that contract support costs are the “reasonable costs for

activities” that are “normally not carried on by the respective

Secretary in his direct operation of the program,” 6 yet “must be

carried on by a tribal organization as contractor to ensure

compliance . . . and prudent management.”

§ 5325(a)(2).

The question, then, is what activities are “normally not

carried on” by an agency in operating a program.

(a)(2)(A). Both the statute, see

and IHS regulations,

see

, et. seq., are silent on this question.

Furthermore, IHS neither suggests a definition of “normally,”

nor provides examples of what “normal” costs would be. See

generally Defs.’ MSJ, ECF No. 15.

The “dictionary definition” of “normal” and the “everyday

meanings of the term and phrase [as used in the statute]” do not

provide clarity, especially given the complexities of federal

6 Contract support costs may also include funds that “are provided by the Secretary in support of the contracted program from resources other than those under the contract.”

(a)(2)(B). Neither party argues that CITC’s requested facility support costs meet this definition. See generally Pl.s’ MSJ, ECF No. 13-1; Defs.’ MSJ, ECF No. 15. 20 program funding. See Howmet Corp. v. Envt’l. Prot. Agency,

(D.C. Cir. 2010)(looking to the dictionary

definition and everyday meaning of “purpose” to determine that

the term, as used in the statute, was ambiguous). For example,

“normal” means “according to a regular pattern,” “an established

rule,” or a “standard or norm.” See “Normal,” Black’s Law

Dictionary (10th ed. 2014). To determine if a cost is “normally”

carried by an agency, see

(a), the Court must

have some indication or knowledge about what is “standard,”

“typical,” or “established” agency practice with regard to

program spending. See “Normal,” Black’s Law Dictionary (10th ed.

2014). The Court has been provided with no such information

about typical agency practice. Without more, the intent of

Congress is not clear; the statute is “silent or ambiguous with

respect to the specific issue.” Chevron,

. And

reading the statute “as a whole” does not reveal a “clear

congressional intent regarding the relevant question.” Nat’l

Envt’l. Dec. Ass’ns Clear Air Project v. Envt’l. Prot. Agency,

(D.C. Cir. 2018)(quotations omitted).

IHS argues that the provision is unambiguous because

facility support costs are “normally” incurred by an agency in

running a treatment program. See, e.g., Defs.’ MSJ, ECF No. 15

at 19-20, 26; Defs.’ Reply, ECF No. 21 at 2-5. But costs

“normally” incurred in running a federal program is not clear or

21 obvious. For example, in responding to CITC’s proposed contract

amendment, IHS stated that it “accepted all of CITC’s proposed

direct [contract support costs], with the exception of the . . .

facility costs.” Defs.’ MSJ, ECF No. 15 at 5 (citing A.R., ECF

No. 11-1). IHS accepted as eligible contract support costs

activities that included “training” and “certification” for

various treatment professionals. See A.R., ECF No. 11-1 at 6.

IHS does not explain why training and certifying treatment staff

would not be an activity the Secretary would “normally . . .

carr[y] on” in operating a treatment center, whereas facility

support costs would be. Just as IHS argues that facility support

costs are a “normal” cost incurred in operating a treatment

program, so too arguably is training and certifying the staff

needed to treat patients. There is nothing in the statute that

suggests one cost is a “normal” program cost, while the other is

not. See generally

.

The Court recognizes that facility support costs were

provided in the Secretarial amount when the contract was

initially executed in 1992, and that at least a portion of

facility support costs have been provided annually in the

Secretarial amount since then. Pl.’s Stmt., ECF No. 13-2 ¶ 4;

Defs.’ MSJ, ECF No. 15 at 18. But IHS does not explain why

facility support costs are “normally” incurred by an agency in

running a treatment program, nor does it elaborate on other

22 costs that are “normally” incurred by an agency in operating a

federal program. C.f. Consumer Fed’n of Am. & Pub. Citizen v.

U.S. Dep’t of Health & Human Servs.,

(D.C.

Cir. 1996) (finding the agency’s interpretation of an ambiguous

statutory provision inadequate in part because the agency failed

to define “normal working conditions” and explain why the

protocol it selected was normal). Moreover, and as will be

discussed in greater detail, IHS does not sufficiently explain

why facility support costs cannot be funded by both types of

funding, to the extent the funding is not duplicative.

Indeed, the Court discusses IHS’ Indian Health Manual

(“Manual”)—a document created by IHS to provide guidance

regarding eligible contract support costs—in further depth

below, but one provision provides further support for the

Court’s conclusion that the funding provision is ambiguous. In

defining direct contract support costs, IHS states that

“facility support costs” may be eligible as contract support

costs “to the extent not already made available.” See Indian

Health Manual (“IHM”) § 6-3.2(D), available at

https://www.ihs.gov/ihm/pc/part-6/p6c3/. 7 Since IHS itself

7 IHS includes Part 6, Chapter 3 of the Indian Health Manual as Exhibit 1 to its reply. See ECF No. 21-1. However, the version IHS attaches is not the most recent version of the Manual. Throughout this Opinion, the Court cites and refers to the updated version of the Manual located at https://www.ihs.gov/IHM/. 23 provides guidance that asserts that facility support costs may

also be eligible as contract support costs, the Court is

persuaded that the ISDEAA funding provision is ambiguous. 8

The ISDEAA’s legislative history also supports this

conclusion. In 1994, Congress amended the ISDEAA to “more fully

define” contract support costs. S. Rep. No. 103-374, at 8

(1994). Congress clarified that “[i]n the event the Secretarial

amount . . . for a particular function proves to be insufficient

in light of a contractor’s needs for prudent management of the

contract, contract support costs are to be available to

supplement such sums.” Id. at 9.

While it may well be reasonable to assume that an agency to

“normally” incurs facility support costs when operating a

treatment center, the Court is not persuaded that Congress has

“unambiguously expressed” its intent such that IHS’

interpretation is required by the statutory language.

Chevron,

; see also Air Transp. Ass'n of Am. v.

FAA,

, 4 (D.C. Cir. 1999) (“Although the inference

petitioner would draw as to the statute's meaning is not by any

means unreasonable, it is also not inevitable.”). It is plain

8 True, the Manual also states that facility costs may be funded as contract support costs in “extremely rare” circumstances. IHM Ex. 6-3-G § C. However, the Manual goes on to clarify that those “extremely rare circumstances” exist “when the awardee did not receive funds” in the Secretarial amount. Id. CITC argues just that. See infra Sec. IV.C. 24 that facility support costs may be activities “normally” carried

on by IHS but may also be “reasonable costs for activities which

must be carried on by a tribal organization as contractor to

ensure compliance with the terms of the contract and prudent

management,” as CITC argues.

(a)(2).

Thus, the Court concludes that the ISDEAA’s funding

provision is ambiguous: it is “fairly capable of two

interpretations,” and the tribe’s “interpretation is fairly

possible.” Chickasaw Nation,

(quotations

omitted).

C. CITC’s Interpretation is Reasonable in Light of IHS’ Guidance

Because the Court finds the provision at issue to be

ambiguous, the Court must liberally construe it in CITC’s favor.

Blackfeet Tribe,

. CITC argues that facility

support costs are eligible as contract support costs because

they are “reasonable costs for activities which must be carried

on by a tribal organization as contractor” pursuant to

(a)(2). See Pl.’s MSJ, ECF No. 13-1 at 1. As such, IHS

“shall” approve the contract proposal and fund the requested

facility support costs as a contract support costs.

at 5

(quoting

(a)(2)). CITC argues that this

interpretation is consistent with IHS’ Manual. See

;

Pl.’s Reply, ECF No. 18 at 4-14. IHS also relies on its Manual

25 to argue that CITC’s interpretation is not reasonable because

facility support costs are clearly and exclusively included in

the Secretarial amount. See Defs.’ MSJ, ECF No. 15 at 11-12, 17

“Although not the only plausible interpretation, [CITC’s]

interpretation is a reasonable one.” Maniilaq Ass’n, 170 F.

Supp. 3d at 251. In Maniilaq Association, Judge Bates found

another provision of the ISDEAA to be ambiguous. Id. at 249-51

(analyzing

(l), which entitles tribal

contractors to an unexplained amount of compensation for leases,

which “may include” “reasonable expenses” associated with the

lease). In light of the statute’s ambiguous language and IHS’

contradictory guidance interpreting such language, Judge Bates

found that the tribe’s interpretation was reasonable because it

found “some support” in IHS’ guidance.

(construing

all ambiguities in favor of the tribe). So here too. While IHS’

regulations do not directly address the issue before the Court,

IHS’ guidance contradicts its interpretation, and CITC’s

interpretation finds “some support” in the Manual.

Because “the ISDEAA does not provide any formula or

methodology for calculating [contract support costs],” IHS

developed the Manual to “provide[] guidance to both Tribal and

Agency personnel in the preparation and negotiation of requests

for [contract support costs].” Defs.’ MSJ, ECF No. 15 at 11; see

also IHM § 6-3.1. The Manual is not a regulation and is

26 therefore not binding on the agency or the tribes, see IHM § 6-

3.1, but it is cited frequently by IHS as evidence that its

interpretation is compelled by the ISDEAA, see generally Defs.’

MSJ, ECF No. 15. As IHS states, the Manual “provides specific

guidance for each category of [contract support costs]” and

“provides guidance on whether other specific costs are eligible

for [contract support costs] funding.” Defs.’ MSJ, ECF No. 15 at

12. In fact, the self-determination contract between CITC and

IHS incorporates the Manual to the extent it is not inconsistent

with the ISDEAA. A.R., ECF No. 11-1 at 21 § (2)(7)(A) (contract

support costs shall be “recalculated as necessary to reflect the

full [contract support costs] required [under the ISDEAA] . . .

as specified in the IHS Manual Part 6, Chapter 3.”).

The Manual contemplates that facility support costs may be

eligible for contract support costs funding. It defines direct

contract support costs as described in the statute,

(a)(2)-(3), and provides “examples” of “direct costs

eligible for [contract support costs] funding.” IHM § 6-

3.2(D)(1)(e). Included in the list of eligible examples is

“facility support costs to the extent not already made

available.” Id. The Manual also contemplates that facility

support costs can also be “indirect costs” that are eligible for

contract support cost funding pursuant to

(a)(2)-(3). IHM Ex. 6-3-G § (A)(2)(C). To illustrate,

27 pursuant to the Manual “indirect-type costs” “normally” consist

of cost categories that fall within the requirements of the

contract support costs definitional subsections. Id. These

indirect-type costs “generally” fall into three categories, one

of which is “facilities and equipment.” Id.

The Manual therefore suggests that facility support costs

may be funded as both Secretarial funding and contract support

costs funding, so long as there are no duplicate payments. For

example, in a Manual exhibit describing IHS’ “standards for

review and approval of contract support costs,” IHS elaborates

that “rent/utilities” are “generally . . . not included in the

[direct contract support costs] requirement.” IHM Ex. 6-3-G § C.

It clarifies that facility support costs are eligible as

contract support costs in “extremely rare circumstances when the

awardee did not receive the funds in the Section 5321(a)(1)

[Secretarial funding] amount.” Id. IHS frequently points to this

language to support its argument that facility support costs

must be included in the Secretarial amount. See generally Defs.’

MSJ, ECF No. 15. However, the Manual makes clear that facility

support costs may be funded as contract support costs when they

not provided within the Secretarial amount, as CITC argues is

the case here. See IHM Ex. 6-3-G § C; IHM § 6-3.2(D)(1)(e)

(“examples” of “direct costs eligible for [contract support

costs] funding” include “facility support costs to the extent

28 not already made available”). Indeed, in 1994 Congress amended

the ISDEAA to make available contract support costs funding for

costs not otherwise provided for in the Secretarial amount. See

S. Rep. No. 103-374, at 9 (1994) (“[i]n the event the

Secretarial amount . . . for a particular function proves to be

insufficient in light of a contractor’s needs for prudent

management of the contract, contract support costs are to be

available to supplement such sums”). Thus, the Manual does not

foreclose the possibility that facility support costs may be

funded as contract support costs, albeit in limited

circumstances when not otherwise provided.

In sum, the Manual—a document created by IHS to provide

instructional guidance regarding an ambiguous statutory

provision—separately states that facility support costs can be

provided as: (1) “direct” contract support costs funding; (2)

“indirect-type” costs normally eligible for contract support

costs funding; and (3) “generally” included in the Secretarial

amount. See IHM §§ 6-3.1, et. seq.; IHM Ex. 6-3-G. Given this

contradictory guidance, and construing all ambiguities in CITC’s

favor, CITC’s interpretation that facility support costs may

also be funded as contract support costs to the extent not

already provided is imminently reasonable. See also Maniilaq

Ass’n, 170 F. Supp. 3d at 251 (concluding that the tribe’s

29 interpretation, which found “some support” in the contradictory

regulations, was reasonable).

D. IHS’ Interpretation is Not Compelled by the ISDEAA

IHS argues that its declination decision was compelled by

the ISDEAA. First, IHS highlights the Manual language that

“rent/utilities” are only eligible as direct contract support

costs in “extremely rare circumstances.” See, e.g., Defs.’ MSJ,

ECF No. 15 at 17 (quoting IHM Exhibit 6-3-G). However, the

Manual suggests that facility support costs could be eligible

for contract support costs funding when not otherwise made

available in the Secretarial amount. As discussed, “facility

support costs” may be eligible for direct contract support costs

funding “to the extent not already made available.” IHM § 6-

3.2(D)(1)(e) (listing examples of direct contract support costs

and including facility support costs); see also S. Rep. No. 103-

374, at 9 (1994) (“[i]n the event the Secretarial amount . . .

for a particular function proves to be insufficient in light of

a contractor’s needs for prudent management of the contract,

contract support costs are to be available to supplement such

sums”). Furthermore, IHS acknowledges that activities that

should be included in the Secretarial amount could nonetheless

be eligible for contract support funding “upon a showing that

the IHS did not actually transfer any funding to the tribe for

the related activity.” Defs.’ Reply, ECF No. 21 at 10, n.28

30 (discussing the Manual). CITC argues just that: IHS has not

transferred funding for facility support costs beyond the

$11,838.50 provided annually since 1992. See Pl.’s Reply, ECF

No. 18 at 16-18. Thus, the necessary facility support cost

funding has not been “made available” and may therefore be

eligible as contract support costs funding. See id.

Second, IHS repeatedly argues that CITC has already

received facility support costs funding in its Secretarial

amount, Defs.’ MSJ, ECF No. 15 at 4, 5, 7; Defs.’ Stmt., ECF No.

15-1 ¶ 8, and that if IHS “pa[id] these costs again as [contract

support costs], [IHS] would violate [the ISDEAA provision] that

prohibits the payment of [contract support costs] for costs

already included in the contractor’s program funding,” A.R., ECF

No. 11-1 at 3. The parties do not dispute that CITC was funded

$11,838.50 in 1992 for facility support costs, and that the

funding was included in the Secretarial amount. Pl.’s Stmt., ECF

No. 13-2 ¶ 4; Defs.’ MSJ, ECF No. 15 at 18. IHS contends that

facility support costs funding has since increased and has been

accounted for in CITC’s Secretarial amount. Defs.’ MSJ, ECF No.

15 at 16-18. IHS fails, however, to cite to any evidence in the

record or to otherwise support this assertion. See generally

id.; Defs.’ Stmt., ECF No. 15-1. Indeed, the Court reviewed the

hundreds of pages of administrative record and could not locate

any documentation supporting IHS’ claim that funding for

31 facility support costs within the Secretarial amount has

increased. See generally A.R., ECF Nos. 11, 17, 20; IHS Answer,

ECF No. 7 ¶ 19 (IHS “has no knowledge of how much of [the lump

sum funding amount] Plaintiff spends for facility costs”).

IHS posits that it is “irrelevant” that it cannot show how

much facility funding has been provided to CITC beyond the

$11,838.50 provided annually since 1992. Defs.’ Reply, ECF No.

21 at 15. The Court disagrees. As discussed at length supra, the

Manual provides that facility support costs may be eligible for

contract support costs funding to the extent they are not

provided in the Secretarial amount. IHM § 6-3.2(D)(1)(e).

Accordingly, IHS has not met its burden to establish that

facility support costs beyond the $11,838.50 were provided in

CITC’s Secretarial amount. In fact, the only support that IHS

cites in its “Statement of Material Facts Not in Dispute” is

CITC’s complaint and its own July 7, 2014 letter declining

CITC’s proposed contract amendment. See Defs.’ Stmt., ECF No.

15-1 ¶ 8 (citing Compl., ECF No. 1 ¶¶ 2, 28, 33); see id. ¶ 13

(citing “Exhibit 3 9 (July 7, 2014 Declination Letter)”). Neither

the complaint nor the declination letter establishes that CITC’s

9 IHS did not attach an “Exhibit 3” to its motion for summary judgment. See ECF No. 15. Fortunately, the Court was able to review the July 7, 2014 declination letter—cited as “Exhibit 3” in IHS’ statement of undisputed facts—because it was included in the administrative record. See A.R., ECF No. 11-1 at 2-3. 32 increased facility support costs were provided in the

Secretarial amount.

Third, IHS argues that because facility support costs were

originally included in CITC’s Secretarial amount, these costs

must always be included in that amount. Essentially, IHS

contends that the ISDEAA clearly mandates that activities may

only be funded by one type of funding. See Defs.’ Stmt., ECF No.

15-1 ¶ 8; Defs.’ MSJ, ECF No. 15 at 18; see also Defs.’ Reply,

ECF No. 21 at 6, 17. The Court disagrees. The statute, IHS’

regulations, and the Manual suggest that activities can be

funded both in the Secretarial amount and as contract support

costs, so long as the funds are not duplicative. See generally

(a).

To illustrate, to “clarify[]” eligible contract support

costs, the Manual includes guidelines for calculating direct

contract support costs. IHM Ex. 6-3-G. To compute the amount

required, “the awardee and the IHS must negotiate the total cost

. . . of the activities to be supported with [contract support

cost funding]. After . . . , the Agency will deduct any funds

that may have been provided to the awardee in the Secretarial

amount for this activity to avoid the duplication of costs.”

§ C. Thus, the Manual contemplates that certain activities may

be funded via both types of funding, so long as the payments are

not duplicative. See id. Indeed, IHS acknowledges that at least

33 one activity is funded by both Secretarial funding and contract

support costs funding. See Defs.’ Reply, ECF No. 21 at 10-11.

According to IHS, “fringe benefits” are “treated differently”

than other types of activities because they are funded as both

Secretarial costs and contract support costs. See id.; see also

IHM Ex. 6-3-G § C (“Fringe benefits have historically

constituted . . . [direct contract support costs]. The Agency

reviews the documented [fringe benefits] amounts requested by

the awardee and deducts the amount provided as part of the

[Secretarial] amount to the awardee.”).

IHS regulations also contradict IHS’ third argument. While

the regulations do not interpret the funding provision at issue,

they do provide that some activities may be funded from multiple

sources. For example, a tribe is entitled to compensation and

costs related to leases under the ISDEAA. See

(l). IHS regulations state that the “same types of costs”

associated with leases “may be recovered in whole or in part” in

the tribe’s Secretarial amount or as lease compensation pursuant

to section 5324(l). See

(referring to

and

(a)(1)); see also Maniilaq

Ass’n, 170 F. Supp. 3d at 252 (“[the regulation] appears to

designate section 105(l) leases and [secretarial] funding as

equivalent methods of tribal cost recovery.”). Not unlike the

Manual’s guidance, IHS’ regulations undermine its argument that

34 activities are funded exclusively in one category. See Defs.’

Reply, ECF No. 21 at 2-3.

Indeed, the ISDEAA provision prohibiting duplicate funding

is necessary only because activities may be funded in both the

Secretarial amount and as contract support costs. See

(a)(3)(A). If there was no overlap between the two funding

provisions, as IHS contends, this section of the statute would

be superfluous. See United States v. Jicarilla Apache

Nation,

(2011) (“As our cases have noted in

the past, we are hesitant to adopt an interpretation of a

congressional enactment which renders superfluous another

portion of that same law”) (quotations omitted). And there would

be no need to “deduct any funds” from the contract support costs

funding that “may have been provided . . . in the [S]ecretarial

amount” because any activity included in the Secretarial amount

would be categorically disqualified from contract support costs

funding. See IHM Ex. 6-3-G § C.

Ultimately, IHS’ conclusion that all facility support costs

must be funded in the Secretarial amount because some have been

since 1992 is not “compelled by the statute and the regulations”

or even IHS’ own guidance. Maniilaq Ass’n, 170 F. Supp. 3d at

252-54 (concluding that the HHS Secretary’s interpretation of

the ISDEAA was not compelled by the statute and regulations

after determining that the statute was vague and the tribe’s

35 interpretation was reasonable). As in Maniilaq Association,

“[t]hese questions pose serious problems for the Secretary's

interpretation, which the Secretary has not adequately

addressed.” Id. at 254.

E. Remand is the Appropriate Remedy

The Court finds that IHS’ declination decision was not

clearly required by the ISDEAA, as non-duplicative facility

support costs may reasonably be funded as contract support

costs. Thus, IHS has not clearly demonstrated that the funds

requested are “in excess of the applicable funding level for the

contract.” See A.R., ECF No. 11-1 at 2-3 (Declination Letter).

Mindful of the government’s obligation to “clearly demonstrate”

the declination criteria,

(a)(2), and the

Court’s obligation to construe the ISDEAA “liberally in favor

of” CITC, Chickasaw Nation,

, the Court hereby

grants in part CITC’s motion for summary judgment and denies the

defendants’ cross-motion for summary judgment.

That leaves only the issue of remedy. Unlike Secretarial

funding—which is committed to the agency’s discretion, see

(a)(1)(“the amount of funds provided . . . shall

not be less than the appropriate Secretary would have otherwise

provided”)—contract support funding is not, see

§

5325(a)(2). As such, the “government cannot back out of its

contractual promise to pay each Tribe’s full contract support

36 costs.” Salazar v. Ramah Navajo Chapter,

(2012); Ramah Navajo Sch. Bd. v. Babbitt,

, 1344

(D.C. Cir. 1996)(“Congress has clearly expressed in the [ISDEAA]

both its intent to circumscribe as tightly as possible the

discretion of the Secretary . . . . Congress left the Secretary

with as little discretion as feasible in the allocation of

[contract support funds].”)(citations omitted).

CITC asks the Court to reverse IHS’ declination decision,

declare that CITC’s contract amendment proposal is approved, and

order immediate injunctive relief by awarding an additional

$467,201.50 10 in contract support costs funding to CITC’s 2014

contract. Pl.’s MSJ, ECF No. 13-1 at 20.

The Court will vacate the Secretary's declination decision

but stop short of granting the other specific relief that CITC

requests. The ISDEAA authorizes the Court to “order appropriate

relief including money damages, injunctive relief . . . , or

mandamus to compel an officer or employee of the United States,

or any agency thereof, to perform a duty . . . (including . . .

to compel the Secretary to award and fund an approved self-

determination contract).”

(a). Here, however,

the record does not contain sufficient documentation to support

10This amount reflects the $479,040 CITC requests for facility support costs less the $11,838.50 it has been awarded annually since 1992. See Pl.’s MSJ, ECF No. 13-1 at 20. 37 CITC’s full request. See generally A.R., ECF Nos. 11, 17, 20.

For example, the Court cannot assure itself that the $467,201.50

requested reflects the “reasonable and allowable costs” for

facility support costs funding pursuant to

(a)(2),(3). Moreover, because the administrative record does

not contain any information regarding the facility support costs

paid via the Secretarial amount, the Court cannot assure itself

that CITC’s request does not duplicate any funding already

provided. See A.R., ECF Nos. 11-1, 17, 20;

(a)(3)(A).

Therefore, the Court will remand CITC’s contract proposal

to IHS for a decision consistent with this Memorandum Opinion.

See Florida Power & Light Co. v. Lorion,

(“the

proper course . . . is to remand to the agency for additional

investigation” when “the record before the agency does not

support the agency action, if the agency has not considered all

relevant factors, or if the reviewing court simply cannot

evaluate the challenged action on the basis of the record before

it”). As the record stands now, there is insufficient

information for the Court to determine the amount CITC is owed

for facility support costs. As this Opinion makes clear,

however, CITC’s contract amendment proposal was improperly

declined. Therefore, on remand, IHS must review CITC’s proposal

in a manner consistent with this Memorandum Opinion and

38 determine the amount of facility support costs that should be

funded as contract support costs beginning with the 2014

contract to date.

V. Conclusion

For the reasons set forth above, the Court GRANTS IN PART

CITC’s motion for summary judgment and DENIES defendants’ cross-

motion for summary judgment. IHS’ declination decision is

VACATED. CITC’s contract amendment proposal is REMANDED to IHS

for a determination consistent with this Memorandum Opinion

regarding the amount of facility support costs that should be

funded as contract support costs, beginning with the 2014

contract to present. The Clerk of Court is directed to close

this case, with such closure being without prejudice to a motion

to re-open following further IHS proceedings. A separate Order

accompanies this Memorandum Opinion.

SO ORDERED.

Signed: Emmet G. Sullivan United States District Judge November 7, 2018

39