Opinion ID: 173267
Heading Depth: 3
Heading Rank: 2

Heading: Relevant Factual History

Text: HUD’s Inspector General conducted a nation-wide audit in 2002. This included seventeen on-site visits to Tribal Housing Entities across the nation. At five of the Tribal Housing Entities, it evaluated the accuracy of the current units reported on the Formula Response Forms. The audit revealed some Tribal Housing Entities owned or operated fewer dwelling units than they had reported on their Formula Response Forms and were receiving funds for dwelling units they no longer owned or operated. Those findings prompted a nation-wide audit, which showed Fort Peck, and other Housing Entities not relevant to this appeal, had made the same reporting mistake in fiscal years 1997-2003. HUD demanded a refund of these alleged overpayments. Fort Peck initially refunded a portion of the alleged overpayments but later refused to continue repayment and instead contested the validity of 24 C.F.R. § 1000.318. It -7- argued NAHASDA’s plain language required HUD to continue funding at the 1997 level in the current units portion of the formula. In support of this argument, it stressed Congress’s language that the formula “shall be based on . . . [t]he number of low-income housing dwelling units owned or operated at the time,” meaning all dwelling units owned or operated in 1997 under 25 U.S.C. § 4181(a). (Appellant’s Supp. Appx. at 61.) It asserted HUD’s disqualification of units under 24 C.F.R. § 1000.318 violated Congress’s expressed intent in § 4152(b)(1). Fort Peck asserted the monies it had refunded to HUD must be returned. HUD maintained Congress’s intent in NAHASDA was to fund all tribal housing projects according to their relative need. It reasoned that a Tribal Housing Entity’s need is reduced when dwelling units pass from its control or ownership. See 24 C.F.R. § 1000.318 (dwelling units cease to qualify as a current unit when a Tribal Housing Entity “no longer has the legal right to own, operate, or maintain the unit”); see also 63 Fed. Reg. 12,334, 12,343 (Mar. 12, 1998).9 It explained the regulation followed Congress’s express direction and intent because the reduction set forth in § 1000.318 was created through a negotiated rulemaking process and was an objectively measurable condition. After exhausting the agency appeal process, Fort Peck brought suit in federal court challenging HUD’s final determination. In relevant part, it claimed: (1) § 1000.318 was contrary to the statutory language in NAHASDA and HUD’s conclusions to the contrary 9 One public comment to the proposed rule suggested conveyed units should qualify as current units if the unit is a part of a “five-year Comp Grant plan.” HUD rejected this suggestion stating “a conveyed unit, because it has become a private home, does not qualify as [a current unit].” 63 Fed. Reg. at 12,343. -8- should be overturned; (2) HUD had no authority to seek further refund for overpayment; and (3) the district court should order HUD to return all payments already made. The district court concluded HUD unlawfully deprived Fort Peck of block-grant funding by improperly removing conveyed properties from the formula. Fort Peck Housing Auth. v. United States Dept. of Housing & Urban Dev., 435 F. Supp. 2d 1125, 1132 (D. Colo. 2006). It determined the plain language of § 4152(b)(1) created a minimum or “floor” of dwelling units to be funded and § 1000.318 violated this requirement. Id. In support of this conclusion, the court stressed that 25 U.S.C. § 4181(a) requires any housing formerly funded under the programs established by the 1937 Housing Act “shall, for the following fiscal year and each fiscal year thereafter, be considered a dwelling unit under § 4152(b).” Id. at 1133. The district court concluded “[t]he statute leaves no room for the formula to include some, but not all of the number of [1997 units]” because Congress limited agency discretion when it required HUD “shall” use the “definitive” number of 1997 units. Id. at 1132. It further reasoned that even if the statute was ambiguous, deference must be given to Fort Peck’s reasonable interpretation of the statute because statutes are to be construed liberally to benefit Indian tribes. Id. at 1134. It determined that Fort Peck’s interpretation is consistent with NAHASDA’s purposes and encouraged the building of new homeownership units which would otherwise not be funded. Id. The court considered HUD’s regulation to be fundamentally unfair to Housing Entities with large numbers of homeownership units who “suffer decreases in their share of the annual apportionment” as units are conveyed while “tribes with a large percentage of rental units -9- receive a greater share each year.”10 Id. at 1133. Finally, the district court concluded Fort Peck’s position furthered NAHASDA’s goals of self-governance and selfdetermination by eliminating many bureaucratic burdens and removing HUD’s paternalistic oversight of whether units should be conveyed or participants evicted. Id. at 1134-35. For these reasons the district court invalidated 24 C.F.R. § 1000.318 and ordered HUD “take such administrative action as necessary to implement [its] ruling.” Id. at 1136. In response to a Rule 59(e) motion by Fort Peck11 requesting return of the partial refund of alleged overpayments, the court refused to order such return because these funds had already been distributed to other Housing Entities, making the issue moot. Fort Peck Housing Auth. v. United Stated Dept. of Housing & Urban Dev., No. 05-CV00018, 2006 WL 2192043 at  (D. Colo. Aug. 1, 2006). Instead, it ordered HUD to “take whatever action may be appropriate within its regulatory authority to adjust for its errors in computing [Fort Peck’s] entitlement . . . .” Id. at . 10 HUD’s regulations allowed inclusion of certain dwelling units that Tribal Housing Entities had plans to purchase or construct in 1997 in its initial computation of current units. The regulations do not allow for inclusion of other units which have been built or purchased by a Tribal Housing Entity since that time. 24 C.F.R. § 1000.312. 11 Both parties filed motions under Fed. R. Civ. P. 59(e) to alter or amend the original judgment. HUD requested clarification of the scope of the district court’s judgment and requested guidance as to whether administrative actions against other Tribal Housing Entities were included. The court modified its judgment to limit its holding to administrative action involving Fort Peck. Neither party appealed from this decision. - 10 -