Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-35284/USCOURTS-ca9-13-35284-0/pdf.json

Parties Involved:
Crow Tribal Housing Authority
Appellee
U.S. Department of Housing and Urban Development
Appellant

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CROW TRIBAL HOUSING AUTHORITY,

Plaintiff-Appellee,

v.

U.S. DEPARTMENT OF HOUSING AND

URBAN DEVELOPMENT,

Defendant-Appellant.

No. 13-35284

D.C. No.

1:06-cv-00051-

RFC

OPINION

Appeal from the United States District Court

for the District of Montana

Richard F. Cebull, Senior District Judge, Presiding

Argued and Submitted

October 9, 2014—Portland, Oregon

Filed March 26, 2015

Before: Raymond C. Fisher, Morgan Christen,

and Jacqueline H. Nguyen, Circuit Judges.

Opinion by Judge Christen

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2 CROW TRIBAL HOUSING AUTH. V. HUD

SUMMARY*

Tribal Matters / Housing

The panel vacated the district court’s order remanding the

case to the Department of Housing and Urban Development

(“HUD”) for a hearing, reversed the judgment, and remanded

for judgment to be entered in favor of HUD in a case brought

by the Crow Tribal Housing Authority, arising from a dispute

involving Indian housing block grants made under the Native

American Housing Assistance and Self-Determination Act of

1996.

The panel held that the district court erred in ruling that

HUD violated Crow Housing’s right to Native American

Housing Assistance and Self-Determination Act of 1996’s

notice and reporting requirements under 25 U.S.C. §§ 4161

and 4165. 

Specifically, the panel concluded that HUD did not act

under § 4161, and accordingly, could not have violated a

hearing requirement under that section. The panel further

concluded that HUD’s actions triggered the opportunity for

a hearing under § 4165 when it conducted an on-site review

of Crow Housing in August 2004. Finally, the panel held that

because Crow Housing did not request a hearing, HUD did

not violate its statutory obligation under § 4165 and did not

improperly deprive Crow Housing of a hearing under the

facts of the case.

* This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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CROW TRIBAL HOUSING AUTH. V. HUD 3

COUNSEL

Jonathan H. Levy (argued) and Michael S. Raab, Attorneys,

Appellate Staff; Stuart F. Delery, Assistant AttorneyGeneral;

Michael W. Cotter, United States Attorney, Civil Division,

Department of Justice, Washington, D.C.; and Victoria L.

Francis, Assistant United States Attorney, Office of the

United States Attorney, Billings, Montana, for DefendantAppellant.

Dennis M. Bear Don’t Walk (argued) and Roger J. Renville,

Office of Legal Counsel, Crow Nation Executive Branch,

Crow Agency, Montana, for Plaintiff-Appellee.

OPINION

CHRISTEN, Circuit Judge:

This case arises from a dispute involving Indian housing

block grants made under the Native American Housing

Assistance and Self-Determination Act of 1996

(“NAHASDA”), 25 U.S.C. §§ 4101–4243. Since 1998, Crow

Tribal Housing Authority (“Crow Housing” or “the Tribe”),1

located in Montana, has received NAHASDA grant payments

from the Department of Housing and Urban Development

(“HUD”). In 2001, HUD realized that it had overpaid Crow

Housing and sought to recover the overage through

deductions from future grants. HUD did not provide Crow

Housing with a hearing at which these deductions could be

contested, and this appeal concerns whether that was

 

1 Crow Housing also refers to itself as the Apsaalooke Nation Housing

Authority.

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4 CROW TRIBAL HOUSING AUTH. V. HUD

improper. The district court held that HUD acted under

25 U.S.C. § 4161 and § 4165, and that it violated the Tribe’s

right to notice and a hearing. This appeal followed.

Because the record establishes that HUD’s actions

triggered 25 U.S.C. § 4165 but did not violate that section’s

hearing requirement, we reverse the district court’s judgment.

BACKGROUND

I. Statutory and Regulatory Framework

NAHASDA was enacted primarily to “provid[e]

affordable homes in safe and healthy environments” for

members of Indian tribes, in a way that “recognizes the right

of Indian self-determination and tribal self-governance.” 

25 U.S.C. §§ 4101(5), (7). It replaced several disparate

housing assistance programs with the Indian Housing Block

Grant Program. The Act authorizes HUD to allocate grants

among recipient tribes. Id. § 4152(a)(1). Because all tribes

receive grants from the same finite pool of funds, see

25 U.S.C. § 4151, overpayments to one tribe directly reduce

the funds available for other tribes.

HUD uses an allocation formula that considers a tribe’s

Formula Current Assisted Stock (FCAS) and need. 24 C.F.R.

§ 1000.310. The FCAS is the product of multiplying a fixed

subsidy by the number of low-income housing units a tribe

owns or operates. Id. § 1000.316. FCAS accounts for certain

lease-to-own housing units until a tribe “no longer has the

legal right to own, operate, or maintain the unit[s], whether

such right is lost by conveyance, demolition, or otherwise.” 

Id. § 1000.318(a). To ensure FCAS accuracy, HUD requires

recipient tribes to update the status of their housing units in

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CROW TRIBAL HOUSING AUTH. V. HUD 5

an annual Formula Response Form, and to remove units no

longer eligible for inclusion in the formula. Id. §§ 1000.315,

1000.319. Because HUD uses these updates to calculate

annual grants, removal of units directly reduces a tribe’s

annual grant amount. See id. §§ 1000.312, 1000.314.

If a tribe fails to comply with NAHASDA, the Act

provides for certain remedies. 25 U.S.C. § 4161. Subsection

4161(a) requires HUD to offer “reasonable notice and

opportunity for hearing” before finding that a tribe “has failed

to comply substantially” and before imposing those remedies. 

Remedial action is mandatory upon a finding of substantial

noncompliance under this section. Id. § 4161(a)(1).

Under 25 U.S.C. § 4165, HUD may also adjust a tribe’s

grant amount after an audit or review, but adjustments

imposed pursuant to § 4165 are not mandatory.

II. Factual Background and Administrative Proceedings

a. 2001 Inspector General Audit

In August 2001, HUD’s Office of the Inspector General

(“OIG”) issued a report indicating that it had “performed a

nationwide audit to evaluate [NAHASDA] program

implementation.”2 During the audit, OIG “performed on-site

visits at 17 Housing Entities within four of the six Office of

Native American Programs (ONAP) regions.” Though the

audit was described as “nationwide,” the map of the entities

2 OIG is responsible for auditing and evaluating all of HUD’s

operations. The Office of Native American Programs (“ONAP”) is the

HUD entity responsible for administering NAHASDA programs. OIG’s

report and recommendations were directed to ONAP.

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6 CROW TRIBAL HOUSING AUTH. V. HUD

visited shows that OIG performed no on-site visits in the

Northern Plains region, which covers Montana and Crow

Housing. OIG’s “objective was not to audit the tribes but to

assess NAHASDA program performance as a whole.” 

During the on-site visits, OIG “tested the accuracy of HUD’s

FCAS data to determine if the Housing Entities received

correct funding.” OIG discovered FCAS inaccuracies, and

determined that HUD had “over funded some Housing

Entities and under funded others.” The report references

recommendations OIG made to ONAP in May 2001, when it

suggested that the office “[a]udit the [FCAS] for all Housing

Entities,” “[r]ecover over funding,” and “reallocate the

recovery to recipients that were under funded.”

ONAP responded to the recommendations within 60 days:

The ONAP has taken several actions to ensure

that tribes are reporting accurate information

on Formula Current Assisted Stock

(FCAS). . . . This includes guidances to both

tribes and Area ONAP staff, the annual

Formula Response Form and a letter to tribal

leaders. We have incorporated the monitoring

of FCAS in our on-site monitoring. However,

resources are not adequate to provide on-site

monitoring to each grantee.

b. HUD’s Correspondence with Crow Housing

The record contains no evidence that HUD performed onsite monitoring of Crow Housing in 2001, or at any point

before 2004. But by some means, in 2001 HUD discovered

that from 1998 through 2001, it had overpaid Crow Housing

for lease-to-own units that were no longer eligible for FCAS

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CROW TRIBAL HOUSING AUTH. V. HUD 7

consideration. In a September 2001 letter, HUD informed

Crow Housing it had been overpaid because several units had

“been conveyed or were eligible for conveyance.” The letter

gave notice to Crow Housing that HUD planned to recover

the overpayments, and that the Tribe should contact HUD

“within 30 days of the date of th[e] letter” if it disagreed.

Crow Housing did not respond. In January 2002, HUD

sent a second letter indicating it had not heard from the Tribe,

and that it was writing “to confirm . . . agreement with

[HUD’s] information and to determine a repayment plan to

recover any over-allocated funds.” Because it needed to

finalize the matter, HUD informed Crow Housing that if it

did not respond within 30 days, HUD would assume it

acceded to repayment.

Crow Housing’s silence persisted. In June 2002, HUD

sent a third letter enclosing copies of its two previous letters

and stating that the agency had updated the calculations and

determined the overpayment amount. HUD also set forth a

schedule to recoup that amount through adjustments to Crow

Housing’s grants over the course of five subsequent fiscal

years.

More than a year passed. In November 2003, Crow

Housing provided its first response on the issue. It requested

copies of the first two HUD letters and indicated it would

“make the substantive argument against HUD’s position”

upon receipt of those letters. HUD supplied copies of its

earlier letters and informed Crow Housing that although it

had made deductions to the Tribe’s 2002 and 2003

allocations, the agency failed to remove the ineligible units

from its subsequent calculations, resulting in continued

overpayments. HUD added the additional overpayments to

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8 CROW TRIBAL HOUSING AUTH. V. HUD

the balance—resulting in a total of $1,244,837—and invited

Crow Housing to establish a new repayment plan within 30

days.

c. On-Site Review and Administrative Appeal

Crow Housingmet with HUD in April 2004 and asked the

agency to suspend the repayment schedule until HUD

performed an on-site review. HUD agreed. In August 2004

it conducted a three-day “on-site monitoring review” of the

Tribe’s FCAS, and determined a new outstanding balance of

$1,300,043 for Crow Housing’s overpayments. In October

2005, HUD informed Crow Housing of its decision and of the

Tribe’s right to appeal. Crow Housing asked HUD to

reconsider, claiming that the agency “unlawfully [sought] to

terminate, reduce and/or limit [the Tribe’s] federal funding.” 

Crow Housing did not argue that HUD deprived it of a

hearing, nor did it request one.

HUD denied Crow Housing’s request for reconsideration.

III. District Court Proceedings

Crow Housing filed a complaint in the District of

Montana, alleging that HUD violated NAHASDA by finding

the Tribe to be in “substantial noncompliance” with the Act’s

provisions without offering an opportunity for hearing. Both

parties agreed there had been no hearing, and in February

2013 the district court ruled on the parties’ cross-motions for

summary judgment.

First, the district court granted partial summary judgment

to HUD, holding that the agency acted within its statutory

authority when it adjusted Crow Housing’s FCAS account. 

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CROW TRIBAL HOUSING AUTH. V. HUD 9

The court concluded HUD properly reduced the number of

FCAS-eligible units under 24 C.F.R. § 1000.318.3 Crow

Housing has not appealed that decision.

Second, the district court granted partial summary

judgment to Crow Housing, ruling that HUD acted under

25 U.S.C. § 4161 and § 4165 when it sought to recover the

overpayments. The district court concluded that HUD’s

action was arbitrary and capricious because “it violated

[Crow Housing’s] right to NAHASDA’s Notice and Hearing

requirements for substantial noncompliance.” Notably, the

district court held that HUD violated the notice and hearing

requirements under both 25 U.S.C. § 4161(a) and § 4165 and

remanded the matter to HUD for a hearing.

4

HUD timely appealed the second portion of the district

court’s summary judgment ruling. HUD argues that it may

recover overpayments without a formal hearing if it does not

rely on a finding of “substantial noncompliance” under

§ 4161, and further argues that it did not act under 25 U.S.C.

§ 4161 or § 4165 because it exercised its “common law

authority” to recover payments made by mistake. In the

alternative, HUD asserts that even if it did act under § 4165,

Crow Housing was not entitled to a hearing.

HUD’s recovery of the overpayments it made to Crow

Housing is on hold, pending the outcome of this litigation.

3 As discussed, 24 C.F.R. § 1000.318 defines when units no longer

qualify for FCAS consideration.

4 Section 4165’s hearing requirement appears in its interpreting

regulation, 24 C.F.R. § 1000.532(b) (2012).

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10 CROW TRIBAL HOUSING AUTH. V. HUD

STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291, and review

de novo a district court’s ruling on summary judgment. CRM

Collateral II, Inc. v. TriCounty Metro. Transp. Dist. of Or.,

669 F.3d 963, 968 (9th Cir. 2012). “We view the evidence in

the light most favorable to the nonmoving party and

determine ‘whether there are any genuine issues of material

fact and whether the district court correctly applied the

relevant substantive law.’” Id. (quoting Trunk v. City of San

Diego, 629 F.3d 1099, 1105 (9th Cir. 2011)).

We may set aside an agency action “only if it is ‘arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law.’” Ranchers Cattlemen Action Legal

Fund United Stockgrowers of Am. v. U.S. Dep’t of Agric.,

499 F.3d 1108, 1115 (9th Cir. 2007) (quoting 5 U.S.C.

§ 706(2)(A)). The standard of review is “‘highly deferential,

presuming the agency action to be valid and affirming the

agency action if a reasonable basis exists.’” Id. (quoting

Indep. Acceptance Co. v. California, 204 F.3d 1247, 1251

(9th Cir. 2000)).

DISCUSSION

This appeal poses a single question: was Crow Housing

entitled to a hearing before HUD took action to recover its

overpayments of NAHASDA funds? The answer to this

question depends on the authority HUD invoked when it

sought to recover the overpayments. HUD’s letters cited 24

C.F.R. § 1000.318(a)(1) and (a)(2) for the authority to adjust

FCAS counts, but they did not indicate the source of HUD’s

authority to recover the overpayments. The district court

concluded that HUD invoked its authority under § 4161 and

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CROW TRIBAL HOUSING AUTH. V. HUD 11

§ 4165, and that it violated notice and hearing requirements

under both sections. The two sections are the only ones cited

by the parties in the district court and on appeal, and we know

of no other hearing provisions relevant to this case. We

assess the applicability of each section in turn.

I. HUD Did Not Act Under § 4161.

On appeal, Crow Housing relies on the district court’s

determination that HUD acted under § 4161. When HUD

acts under that section, a grantee tribe is plainly entitled to a

hearing. Subsection 4161(a)(1) requires that HUD take

action if, after notice and an opportunity to be heard, it makes

a finding that a grant recipient is in “substantial

noncompliance”:

[I]f the Secretary finds after reasonable

notice and opportunity for hearing that a

recipient of assistance under this chapter has

failed to comply substantially with any

provision of this chapter, the Secretary

shall—

(A) terminate payments under this chapter to

the recipient;

(B) reduce payments under this chapter to the

recipient by an amount equal to the amount of

such payments that were not expended in

accordance with this chapter;

(C) limit the availability of payments under

this chapter to programs, projects, or activities

not affected by such failure to comply; or

(D) in the case of noncompliance described in

section 4162(b) of this title, provide a

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12 CROW TRIBAL HOUSING AUTH. V. HUD

replacement triballydesignated housing entity

for the recipient, under section 4162 of this

title.

(Emphasis added).

In 2008, Congress added another subsection to § 4161(a):

“The failure of a recipient to comply with the requirements of

section 4152(b)(1) of this title regarding the reporting of lowincome dwelling units shall not, in itself, be considered to be

substantial noncompliance for purposes of this subchapter.” 

Id. § 4161(a)(2) (emphasis added). The Senate Report makes

clear that the 2008 amendment was a clarification, not a

substantive change to the statute:

Clarification on Availability of

Administrative Hearing (Amends Section

401(a) of current law): Under this

amendment, if a grant recipient is required to

relinquish overpaid funds due to the inclusion

of housing units deemed ineligible under

Section 301, the action does not constitute

substantial non-compliance by the grantee

and does not automatically trigger a formal

administrative hearing process. The

amendment has been included due to the

significant amount of time and resources

involved in a hearing, which may not be

necessary when a grant recipient is otherwise

in compliance with the requirements of the

Act.

S. Rep. No. 110-238, at 10 (2007) (emphasis added). “We

have long recognized that clarifying legislation is not subject

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CROW TRIBAL HOUSING AUTH. V. HUD 13

to any presumption against retroactivity and is applied to all

cases pending as of the date of its enactment.” ABKCO

Music, Inc. v. LaVere, 217 F.3d 684, 689 (9th Cir. 2000). We

“honor Congress’[s] clarification label” and accept

§ 4161(a)(2) “as a statement of what the statute has meant all

along.” Id. at 690 (alterations omitted) (quoting Beverly

Cmty. Hosp. Ass’n v. Belshe, 132 F.3d 1259, 1266 (9th Cir.

1997)) (internal quotation marks omitted). We therefore

apply § 4161(a)(2) to HUD’s actions in this case, and analyze

§ 4161 with the understanding that failure to update FCAS

counts “shall not, in itself, be considered to be substantial

noncompliance.”

The record contains no evidence that HUD found Crow

Housing to be in “substantial noncompliance.” See Fort

Belknap Hous. Dep’t v. Office of Pub. & Indian Hous.,

726 F.3d 1099, 1104–05 (9th Cir. 2013) (holding HUD did

not act under § 4161 where there was no evidence HUD

found substantial noncompliance). Instead, the agency’s

correspondence to Crow Housing repeatedly indicated that

the overpayments were the result of errors, without attributing

those errors to the Tribe. In correspondence dated September

2001, January 2002, and June 2002, HUD stated that the

Tribe “may have incorrectly received funding” for “units

under the Formula Current Assisted Stock (FCAS)

component of the Indian Housing Block Grant (IHBG)

formula.” Even after its 2004 on-site review, HUD continued

to indicate that the Tribe “incorrectly received credit,”

without attributing fault. HUD’s letters did not state that the

Tribe had failed to “substantially comply” with NAHASDA. 

In fact, HUD’s February 2004 letter asserted that the agency

itself was partly at fault for the continuation of the

overpayments after a repayment schedule had been put in

place: “[W]e discovered that there was an error made in data

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14 CROW TRIBAL HOUSING AUTH. V. HUD

entry and, as a result, the units were not removed from the FY

2002 and 2003 allocations.”

All of HUD’s letters cited 24 C.F.R. § 1000.318, but that

regulation merely defines when units no longer qualify as

FCAS; none of HUD’s letters mention § 4161 or “substantial

noncompliance” with NAHASDA and none of them seek to

impose the remedies and sanctions listed in § 4161. The

record contains no evidence that HUD tried to terminate

payments, reduce payments in an amount equal to payments

not properly expended,5

limit the availability of payments for

other programs or projects, or provide a replacement housing

entity. See 25 U.S.C. § 4161; Fort Belknap, 726 F.3d at

1105–06 (holding HUD’s administrative offset does not

constitute a § 4161(a)(1) remedy). HUD only attempted to

recover the overpayments through a reduction to future grant

distributions—a remedy consistent with § 4165.

We conclude that HUD did not act under § 4161, and,

accordingly, could not have violated a hearing requirement

under that section. We therefore turn to whether HUD’s

actions fell under its § 4165 authority.

II. HUD’s Actions Were Consistent With § 4165.

HUD disputes that it acted under § 4165, but the record in

this case compels the conclusion that HUD’s actions triggered

the opportunity for a hearing under this statutory provision. 

5 HUD claimed only that the Tribe “incorrectly received credit,” and

made no determination on whether any NAHASDA funds had been

improperly expended.

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CROW TRIBAL HOUSING AUTH. V. HUD 15

Subsections 4165(b) and (d) permit HUD to adjust a

tribe’s grant amount after conducting a review or audit:

(b) Additional reviews and audits

(1) In general

In addition to any audit or review under

subsection (a) of this section, to the extent

the Secretary determines such action to be

appropriate, the Secretarymay conduct an

audit or review of a recipient in order to—

(A) determine whether the recipient—

(i) has carried out—

(I) eligible activities in a timely

manner; and

(II) eligible activities and

certification in accordance with

this chapter and other applicable

law;

(ii) has a continuing capacity to carry

out eligible activities in a timely

manner; and

(iii) is in compliance with the Indian

housing plan of the recipient; and

(B) verify the accuracy of information

contained in any performance report

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16 CROW TRIBAL HOUSING AUTH. V. HUD

submitted by the recipient under section

4164 of this title.

(2) On-site visits

To the extent practicable, the reviews and

audits conducted under this subsection

shall include on-site visits by the

appropriate official of the Department of

Housing and Urban Development.

. . . .

(d) Effect of reviews

Subject to section 4161(a) of this title, after

reviewing the reports and audits relating to a

recipient that are submitted to the Secretary

under this section, the Secretary may adjust

the amount of a grant made to a recipient

under this chapter in accordance with the

findings of the Secretary with respect to those

reports and audits.

HUD’s 2004 on-site review of Crow Housing qualified as

a review of “whether the recipient . . . has carried out . . .

eligible activities and certification in accordance with this

chapter and other applicable law.” See 25 U.S.C.

§ 4165(b)(1)(A)(i)(II) (emphasis added). Under 24 C.F.R.

§ 1000.315(a), tribes are required to use the Formula

Response Form to make “corrections to the number of

Formula Current Assisted Stock . . . not less than 60 days

from” when HUD mails the form each year. NAHASDA

does not define “eligible activities and certification,” and it is

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CROW TRIBAL HOUSING AUTH. V. HUD 17

ambiguous whether the term encompasses the reporting

contemplated in § 1000.315(a). But “‘[s]tatutes are to be

construed liberally in favor of the Indians, with ambiguous

provisions interpreted to their benefit.’” Cnty. of Yakima v.

Confederated Tribes & Bands of Yakima Indian Nation,

502 U.S. 251, 269 (1992) (alteration omitted) (quoting

Montana v. Blackfeet Tribe, 471 U.S. 759, 766 (1985)).6

Construing this statutory provision to Crow Housing’s

benefit, we conclude HUD’s 2004 on-site FCAS review

constituted an audit within the meaning of § 4165 to

determine whether the Tribe had carried out “eligible

activities and certification in accordance with this chapter and

other applicable law.” HUD therefore acted consistentlywith

its authority under § 4165.

We do not need to decide whether the letters HUD issued

in the wake of the OIG review triggered § 4165 because in

this case, the Tribe specifically requested an on-site review,

6 We have previously held that this canon ofstatutory interpretation, also

referred to as the Blackfeet presumption, gives way under Chevron,

U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984), to the deference courts normally afford to an agency’s

interpretation of a statute it administers. See Artichoke Joe’s Cal. Grand

Casino v. Norton, 353 F.3d 712, 730 (9th Cir. 2003); Haynes v. United

States, 891 F.2d 235, 239 (9th Cir. 1989). However, where the agency’s

interpretation is not the result of its formal resolution of the question and

is merely a litigating position, as here, Chevron deference does not apply. 

See Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 212–13 (1988);

United States v. Able Time, Inc., 545 F.3d 824, 836 (9th Cir. 2008). Our

interpretation is therefore guided by the Blackfeet presumption and not by

Chevron deference. Even if HUD’s interpretation of its actions was

entitled to some deference under Skidmore v. Swift & Co., 323 U.S. 134

(1944), its “power to persuade” would be minimal due to the lack of any

formal or thorough interpretive process. See United States v. Mead Corp.,

533 U.S. 218, 227–31, 235 (2001).

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18 CROW TRIBAL HOUSING AUTH. V. HUD

and HUD agreed to conduct one. Further, the record shows

that the “on-site monitoring of the Tribe’s [FCAS]” spanned

three days, during which HUD “examined projects on an

individual unit basis, looking at the status of occupancy,

payment, title, and related issues.” HUD’s review appears to

have been both substantive and detailed. Based on the results

of that review, HUD adjusted Crow Housing’s overpayment

balance. Significantly, instead of imposing § 4161 sanctions

(such as terminating payments, reducing payments by the

amounts not properly expended, or limiting availability of

payments to programs), HUD requested as a means of

repayment “adjust[ment of] the amount of a grant” based on

“the findings” from the review. See 25 U.S.C. § 4165(d). On

this record, we have no trouble concluding that HUD

triggered § 4165 when it conducted the on-site review of

Crow Housing in August 2004.7

Our conclusion is entirely consistent with the decision of

the Court of Federal Claims in Lummi Tribe v. United States,

106 Fed. Cl. 623 (2012). Lummi involved a strikingly similar

factual pattern: after the 2001 OIG audit, HUD notified three

tribes that it had overpaid them due to inaccurate FCAS

counts. Id. at 624–25. Without conducting hearings, it

sought to recover the overpayments by deducting them from

future grant allocations. Id. at 625. After the tribes filed suit,

7 The district court reasoned that HUD acted pursuant to § 4165 because

HUD discovered Crow Housing’s FCAS inaccuracies as a result of the

2001 OIG audit. Although we agree that the OIG audit and HUD’s

actions in this case were temporally correlated, it is not clear from the

record that the actions here were a direct result of the 2001 audit. First,

the goal of the review conducted by OIG “was not to audit the tribes but

to assess NAHASDA programperformance as a whole.” Second, the OIG

report expressly stated that it reviewed no entities in Montana, where

Crow Housing is located.

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CROW TRIBAL HOUSING AUTH. V. HUD 19

HUD moved to dismiss, claiming it was not required to offer

a hearing before attempting to recapture the funds. Id. The

Court of Federal Claims concluded that when “HUD acted

pursuant to an audit conducted at the direction of HUD’s

Office of Inspector General,” its action fell within § 4165. Id.

at 630. Specifically, the court suggested that HUD’s actions

constituted a review of “whether the recipient has carried out

eligible activities . . . in accordance with this chapter and

other applicable law.” Id. And because § 4165’s

implementing regulations included an express hearing

requirement, see 24 C.F.R. § 1000.532 (2012), the court

denied HUD’s motion to dismiss. Id. at 634.

As it does here, HUD claimed in Lummi that it acted

through its inherent, common law authority to recover

payments made by mistake. Id. at 629. The Court of Federal

Claims rejected that argument, as do we:

Because we conclude that Section [4165]

applies in the instant case, we further

conclude that HUD was not free to disregard

the requirements of that section in favor of a

common law remedy with no apparent rules

or limitations. Resort to federal common law

is appropriate only when a statute does not

speak to the issue. But where, as here,

Congress has spoken to the question, HUD

may not circumvent that statutory scheme.

Id. at 631–32 (footnote and citations omitted).

In support of its common law claim in this appeal, HUD

points to Fort Belknap Housing Department v. Office of

Public and Indian Housing, 726 F.3d 1099 (9th Cir. 2013). 

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20 CROW TRIBAL HOUSING AUTH. V. HUD

Fort Belknap also involved a situation where HUD

discovered it had overpaid a tribe based on inaccurate FCAS

data, addressed the issue in several letters, and received no

response from the recipient tribe for an extended period. Id.

at 1101–03. When the tribe did respond, HUD decided to

recover overpayments through deductions from future

allocations and, in its final agency action, denied the tribe’s

request for an administrative appeal and reconsideration. Id.

at 1102–04. Unlike Crow Housing, the Fort Belknap tribe

appealed directlyto this court, invokingNAHASDA’s special

jurisdiction provision under § 4161(d).8

 Id. at 1104.

The narrow issue resolved in Fort Belknap was whether

our court had jurisdiction to consider the tribe’s direct appeal. 

Our court reasoned that HUD acts under § 4161(a) only when

it “finds ‘after reasonable notice and opportunity for hearing

that a recipient of assistance . . . has failed to comply

substantially’ with some provision of NAHASDA.” Id.

(emphasis added) (quoting 25 U.S.C. § 4161(a)(1)). Notably,

in Fort Belknap HUD did not attempt to impose any of the

remedies or sanctions allowed under § 4161; it only sought to

recover overpayments through an administrative offset. Id.

at 1104–06. Because HUD asserted it had overpaid the tribe

due to inaccurate FCAS counts and never made a finding of

“substantial noncompliance,” we concluded that it did not act

pursuant to § 4161(a) when it sought to recover

overpayments, and held that our court lacked jurisdiction to

hear Fort Belknap’s appeal. Id.

8 Subsection 4161(d)(1) provides that a recipient tribe may directly

appeal to a circuit court of appeals when it receives notice of agency

action under § 4161(a).

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CROW TRIBAL HOUSING AUTH. V. HUD 21

Here, HUD persuasively argues that it did not act under

§ 4161 because it never suggested that Crow Housing was in

substantial noncompliance, but we do not agree that Fort

Belknap precludes the possibility that HUD’s actions

triggered § 4165, as it argues on appeal. Fort Belknap’s

limited holding only addressed the source of this court’s

jurisdiction. It has no bearing on whether HUD’s actions

triggered § 4165 in this instance.9

III. HUD Did Not Violate A Hearing Requirement

Under § 4165.

Having determined that HUD’s actions triggered § 4165

in this instance, we turn to whether it violated either of

§ 4165’s two hearing requirements. Subsection 4165(d)

provides for a hearing “[s]ubject to section 4161(a).” For the

reasons discussed above, we conclude this hearing

requirement was not triggered because HUD did not act

“[s]ubject to section 4161(a).” We agree with the Court of

Federal Claims that § 4165(d)’s introductory phrase

“indicat[es] that compliance issues must be addressed under

Section 401 and not under Section 405” and “excludes the

9 Fort Belknap suggested that HUD acted under common law authority. 

Id. at 1105. HUD relies on that dicta in this appeal, but HUD does not

explain why a hearing would not be required under common law. Because

we conclude that HUD’s audit triggered § 4165, we do not reach the

question whether HUD could have acted pursuant to the common law, but

we again note Lummi’s persuasive rejection of that theory. See 106 Fed.

Cl. at 631–32.

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22 CROW TRIBAL HOUSING AUTH. V. HUD

scope of Section 401 from Section 405.”10 Lummi, 106 Fed.

Cl. at 632.

The second hearing requirement lies in § 4165’s enabling

regulation: 24 C.F.R. § 1000.532(b) (2012). See id. at 633

(observing that § 4165’s hearing requirement is in 24 C.F.R.

§ 1000.532 (2012)). Section 1000.532 (2012) was in effect

at the time of HUD’s actions in this case, and it was titled

“What are the adjustments HUD makes to a recipient’s future

year’s grant amount under section 405 of NAHASDA?” That

regulation provided:

(a) HUD may, subject to the procedures in

paragraph (b) below, make appropriate

adjustments in the amount of the annual

grants under NAHASDA in accordance with

the findings of HUD pursuant to reviews and

audits under section 405 of NAHASDA. 

HUD may adjust, reduce, or withdraw grant

amounts, or take other action as appropriate in

accordance with reviews and audits, except

that grant amounts already expended on

affordable housing activities may not be

recaptured or deducted from future assistance

provided on behalf of an Indian tribe.[11]

10 Section 405 of NAHASDA refers to 25 U.S.C. § 4165; Section 401

refers to 25 U.S.C. § 4161. See Native American Housing Assistance and

Self-Determination Act of 1996, Pub. L. No. 104-330, 110 Stat. 4016.

11 Crow Housing does not argue that it has already expended grant

funds.

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CROW TRIBAL HOUSING AUTH. V. HUD 23

(b) Before undertaking any action in

accordance with paragraphs (a) and (c) of this

section, HUD will notify the recipient in

writing of the actions it intends to take and

provide the recipient an opportunity for an

informal meeting to resolve the deficiency. In

the event the deficiency is not resolved, HUD

may take any of the actions available under

paragraphs (a) and (c) of this section. 

However, the recipient may request, within 30

days of notice of the action, a hearing in

accordance with § 1000.540. The amount in

question shall not be reallocated under the

provisions of § 1000.536, until 15 days after

the hearing has been held and HUD has

rendered a final decision.

(c) Absent circumstances beyond the

recipient’s control, when a recipient is not

complying significantly with a major activity

of its [Indian Housing Plan], HUD shall make

appropriate adjustment, reduction, or

withdrawal of some or all of the recipient’s

subsequent year grant in accordance with this

section.

(Emphasis added).

Subsection 1000.532(b) (2012) plainly provided for a

hearing only if the tribe “request[s one], within 30 days of

notice of the action.” HUD argues that even if it did act

under § 4165 and § 1000.532(b) (2012), it did not violate any

hearing requirements because Crow Housing did not request

a hearing. We agree. Crow Housing’s briefing points to no

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24 CROW TRIBAL HOUSING AUTH. V. HUD

such request, it was unable to identify any request at oral

argument, and we could find none in the record. Because

Crow Housing did not request a hearing, we cannot say that

HUD violated its statutory obligation under § 4165, and we

hold that HUD did not improperly deprive Crow Housing of

a hearing under the facts of this case.

CONCLUSION

The district court erred by ruling that HUD violated Crow

Housing’s right to NAHASDA’s notice and hearing

requirements under § 4161 and § 4165. We therefore

VACATE the district court’s order remanding the case to

HUD for a hearing, REVERSE the district court’s judgment,

and REMAND for judgment to be entered in favor of HUD.

VACATED, REVERSED, AND REMANDED.

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