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Supreme Court rules government must pay full amount in tribe contracts
Supreme Court rules government must pay full amount in tribe contracts
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[JURIST] The US Supreme Court [official website] ruled 5-4 [opinion, PDF] Monday that the federal government is responsible for the full payment contractually promised to Native American tribes even if Congress does not allocate enough money. Salazar v. Ramah Navajo Chapter [SCOTUSblog backgrounder] involves the Indian Self-Determination and Education Assistance Act (ISDA) [text], which grants authority to several federal departments, including the Departments of Interior, Health, Education and Welfare, to contract directly with American Indian tribes and allow them funding to autonomously replicate that department’s function on their reservation. The contracts have provided, among other things, funds to Native American communities so that they can provide their own school, police and other traditionally government-run services. The act includes a cap of funding for all the tribes’ use and once that is exceeded—even in the scenario where one tribe takes the majority of the funding—the US government argued that it should not be forced to reimburse additional costs taken on by those tribal programs and that they can choose to disperse the funds as they choose. This included paying some contractors in total and others not at all, as the Departments involved see fit. In the majority decision, Justice Sonia Sotomayor said that the government must be required to fulfill its promises in order to preserve the government’s ability to contract:

If the Government could be trusted to fulfill its promise to pay only when more pressing fiscal needs did not arise, would-be contractors would bargain warily—if at all—and only at a premium large enough to account for the risk of nonpayment. In short, contracting would become more cumbersome and expensive for the Government, and willing partners more scarce.

Chief Justice John Roberts, joined by Justices Samuel Alito, Stephen Breyer and Ruth Bader Ginsburg, dissented from the opinion concluding that a clause noting the payment was “subject to availability” freed the government from its obligation to pay when the money allocated by Congress ran out.

The Supreme Court heard oral arguments [JURIST report] in the case in April. The respondents, several American Indian tribes, argued that the government’s distribution of funds was arbitrary and contrary to the Ferris doctrine: an 1892 Court of Claims opinion that sets forth “A contractor who is one of several persons to be paid out of an appropriation is not chargeable with knowledge of its administration, nor can his legal rights be affected or impaired by its maladministration or by its diversion, whether legal or illegal, to other objects.” The doctrine was reaffirmed by the Supreme Court in 2005 through Cherokee Nation v. Leavitt [JURIST report], which held the original presumption that under the Indian Self-Determination and Education Assistance Act, tribes may undertake and be reimbursed for programs that would otherwise be provided by the government. The court granted certiorari [JURIST report] in the case earlier this year in January.