Court Opinion

ID: 2747672
Source: CourtListenerOpinion
Date Created: 2014-11-03 20:01:27.467502+00
Date Added: 2024-06-11T10:15:36.457874
License: Public Domain

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
MANIILAQ ASSOCIATION,

Plaintiff , Civ. Action No. 13-cv-380 (TFH)

SYLVIA BURWELL, Secretary of the
Department of Health and Human Services,
et al.,

Defendant.

 

AMENDED MEMORANDUM OPINION1

Plaintiff Maniilaq Association (“Maniilaq” or “plaintiff’) administers healthcare systems
through a self-determination compact and annual funding agreements under the Indian Self-
Determination and Education Assistance Act (“ISDEAA”), 25 U.S.C. § 458aaa, et seq. The plaintiff
is seeking a declaration that a lease with the Indian Health Service (“IHS” or “defendant”) for one of
the clinics Maniilaq operates under its self—determination compact is incorporated into Maniilaq’s
2013 funding agreement as a matter of law. Pending before the Court are the parties’ cross motions

for summary judgment.2 For the reasons stated below, the Court GRANTS Plaintiff’s Motion for

1 This Memorandum Opinion was amended on November 3, 2014 to correct typographical and
citation errors. The Order issued by the Court on August 22, 2014 [ECF No. 31] stands.

2 See Plaintiff’s Motion for Summary Judgment [ECF No. 17]; Defendant’s Cross Motion for
Summary Judgment and Opposition to Plaintiff’s Motion for Summary Judgment [ECF No. 21];
Plaintiff’s Opposition to Defendant’s Motion to Dismiss and Cross Motion for Summary Judgment
and Reply to Defendant’s Opposition to Plaintiffs Motion for Summary Judgment [ECF No. 27]
(“PL’s Reply”); Defendant’s Reply in Support of Cross Motion for Summary Judgment [ECF No. 29]

(“Deﬁ’s Reply”).

Summary Judgment and DENIES Defendant’s Cross Motion for Summary Judgment. An

appropriate Order accompanies this opinion.

I. FACTS

 

The facts of this case are substantially undisputed. The controversy between the parties
depends on the legal consequences of a letter and proposed lease agreement Maniilaq sent to the IHS
concerning a clinic Maniilaq operates in the Village of Ambler, Alaska (“Ambler Clinic”).

IHS is the agency within the Department of Health and Human Services (“HHS”) responsible
for providing federal health services to American Indians and Alaska Natives. Def.’s Mem. in Supp.
of Mot. to Dismiss or, in the Alternative for Summ. J. 3 [ECF No. 21] (“Def.’s Mem.). A critical
component of those services is the Community Health Aide Program (“CHAP”), which requires IHS
to train community health aides to provide healthcare to individuals in remote areas of rural Alaska.
See 25 U.S.C. § 1616!. To facilitate CHAP, IHS leases Village Built Clinics (“VBCS”) from Alaska
villages in order to provide a suitable location to deliver services. Pl.’s Mem. of P. & A. in Supp. of

Pl.’s Mot. for Summ. J. 4 [ECF No. 17] (“Pl.’s Mem. of P. & A.”).

Maniilaq is an Alaska Native Regional Non—Proﬁt Corporation that operates a comprehensive
health services delivery program for its twelve member Alaska Native village tribes, and other
eligible American Indians and Alaska Natives, in the Northwest Arctic Borough. Id. at 10. Pursuant
to the ISDEAA, the Indian Health Care Improvement Act, and its self—determination compact with
IHS, Maniilaq takes responsibility for delivering CHAP and other health care related programs,
functions, services, and activities (“PFSAS”) which IHS would otherwise be required to provide. Id.

at 1; see 25 U.S.C. § 450f(a)(1). The self—determination compact between IHS and Maniilaq is

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§§ 4501(a) and (0); id. at § 45 8aaa-3(a). These compacts are accompanied by a separate FA
identifying the PF SAs the tribe will provide and the funding the tribe will receive from IHS for those
PFSAs. Id. at § 458aaa—4.

The ISDEAA anticipates that there will be instances where IHS and the tribe cannot agree on
the terms of a FA and sets out a procedure to resolve these disputes. The statute instructs that if “the
Secretary and a participating Indian tribe are unable to agree, in whole or in part, on the terms of a
compact or funding agreement (including funding levels), the Indian tribe may submit a ﬁnal offer to
the Secretary.” 25 U.S.C. § 458aaa~6(b). Within “45 days after such submission, or within a longer
time agreed upon by the Indian tribe,” the Secretary “shall review and make a determination with
respect to such offer.” Id. Section 458aaa-6(c)(l)(A) lists four grounds IHS may use to justify the
rejection of a final offer.5 If the IHS fails to timely respond to the offer, the consequences are severe:
“In the absence of a timely rejection of the offer, in whole or in part, made in compliance with

subsection (c), the oﬁ’er shall be deemed agreed to by the Secretary.” 25 U.S.C. § 458aaa—6(b)

(emphasis added).

5 Those grounds are:
(i) the amount of funds proposed in the ﬁnal offer exceeds the applicable funding level

to which the Indian tribe is entitled under this part;
(ii) the program, function, service, or activity (or portion thereof) that is the subject of
the ﬁnal offer is an inherent Federal function that cannot legally be delegated to an
Indian tribe;
(iii) the Indian tribe cannot carry out the program, function, service, or activity (or
portion thereof) in a manner that would not result in significant danger or risk to the
public health; or
(iv) the Indian tribe is not eligible to participate in self-governance under section [ ]
[458aaa—2]. . . .

25 U.S.C. § 458aaa-6(c)(l)(A)(i)—(iv).

;.11..

IHS’s regulations conﬁrm that a “ﬁnal offer” becomes part of the tribe’s FA if the agency
fails to respond. The title of 42 CPR. § 137.136 poses the following question: “What happens if the
agency takes no action within the 45 day review period (or any extensions thereof)?” The answer is
simple: “The ﬁnal offer is accepted automatically by operation of law.” 42 C.F.R. § 137.136. The
next section makes it clear that this rule is absolute, stating that “there are no exceptions to this rule if
the 45 day review period or extension thereto, has expired, and the Tribe’s offer is deemed accepted
by operation of law.” 42 CPR. § 137.137. The regulations go on to address the consequences of
acceptance or deemed acceptance. Section 137.138 states that “[a]ﬁer the Indian Tribe’s ﬁnal offer is
accepted or deemed accepted, the terms of the Indian Tribe’s ﬁnal offer and any funds included

therein, shall be added to the funding agreement or compact within 10 days of the acceptance or the

deemed acceptance.” 42 C.F.R. § 137.138.

B. The Effect of Maniilag’s November 28, 2012 Letter
The defendant acknowledges that it did not respond to the plaintiff 3 November 28, 2012

letter within 45 days. See Def.’s Statement of Material Facts 11 8 [ECF No. 21]. IHS nevertheless
argues that the proposed lease is not part of the FA because (1) Maniilaq did not follow the
procedural requirements for submitting a ﬁnal offer; and (2) a lease is not an appropriate provision of

a FA. See Def.’s Mem. [ECF No. 21]. Neither argument is convincing.

1. Whether Maniilag’s purported “ﬁnal offer” satisfied formal reguirements
codiﬁed in IHS’s regulations

A regulation implementing the ﬁnal offer provisions entitled “How does the Indian Tribe
submit a ﬁnal offer?” speciﬁes the technical requirements for submitting ﬁnal offer:

(a) A written ﬁnal offer should be submitted:
(1) During negotiations to the agency lead negotiator or
(2) Thereafter to the Director.

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(b) The document should be separate from the compact, funding agreement, or
amendment and clearly identiﬁed as a “Final Offer.”

42 C.F.R. § 137.132. IHS argues that the November 28 letter fails to satisfy the requirements that a
ﬁnal offer be “separate from the . . . amendment” and “clearly identiﬁed as a ‘Final Offer,” Def.’s

Mem. 21-23, an argument that largely depends on the Court’s acceptance of IHS’s deﬁnition of those

terms as they are used in the regulation.6

Under the defendant’s reading, a ﬁnal offer is not “separate” from the amendment if the
amendment is sent with the ﬁnal offer. See Def.’s Reply 5 (“The Plaintiff concedes that it attached
the proposed amendment, the proposed lease at issue, to the [November 28 letter.]”). But IHS’s
interpretation of “separate” to mean “far away from” does not make logical sense. As the plaintiff
succinctly explains, the requirement that a ﬁnal offer be made in a separate document from the
amendment “prohibits contractors from submitting an amended compact or a funding agreement
proposal without separately identifying or explaining any new proposed terms,” in order to spare IHS
“the burden of identifying the proposed changes” in the amendment or FA. P1.’s Reply 9. Therefore,

the better reading of the term “separate” in this context requires the ﬁnal offer to be made in a distinct

6 For the ﬁrst time in its reply, IHS states that the Court should give deference to the agency’s
interpretation of its own regulations. Def’s Reply 5. Leaving aside the question of whether
deference would be appropriate in this type of case, see Cobell v. Norton, 240 F.3d 1081, 1101 (DC.
Cir. 2001), the IHS’s reasoning does not accurately reﬂect the law. IHS states that “lHS’s
interpretation of its own regulation should be given deference because (a) the regulation is not
ambiguous and (b) the agency’s interpretation is not plainly erroneous or inconsistent [with the
regulation].” Def.’s Reply 5. The Supreme Court has made it clear that deference to an agency’s
interpretation of its own regulation is only appropriate when, as a threshold matter, the regulation is
ambiguous. See, e. g., Christensen v. Harris County, 529 US. 576, 588 (2000) (deference to an
agency’s interpretation of regulations “is warranted only when the language of the regulation is
ambiguous”). However, IHS asserts that it should get deference because 42 CPR. § 137.132 is not
ambiguous. Def’s Reply 5. Therefore, the Court will give no special deference to IHS’s

interpretation of 42 CPR. § 137.132.
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document from the amendment itself, but does not prohibit sending the amendment along with the
ﬁnal offer letter, as Maniilaq has done.7

IHS also argues that the November 2012 letter was not sufﬁciently “clearly identiﬁed” to
satisfy 42 C.F.R. § 137.132(b). Def’s Mem. 22. Both parties agree that the purpose of the
requirement that a “ﬁnal offer” be “clearly identiﬁed” as such is to put IHS on notice that the 45 day
statutory clock is ticking. See Pl.’s Mem. of P. & A. 9; Def’s Mem. 20. IHS argues that in this case,
“IHS was not put on notice that Plaintiff’s November 2012 letter was intended as a ﬁnal offer.”
Def.’s Mem. 22. According to IHS, 42 C.F.R. § 137.132 “requires that the whole document be
clearly identiﬁed as a ﬁnal offer.” Def’s Reply 6. The defendant observes that “[n]oticeably absent
from the subject line of the [November 28] letter on the ﬁrst page is any indication that this letter
constitutes a ﬁnal offer.” Def’s Mem. 22. IHS complains that in Maniilaq’s “lengthy four page
letter,” the plaintif “used the term ﬁnal offer for the ﬁrst and only time” on the third page, arguing
that “[t]his type of obfuscation is precisely contrary to the requirement and need that a ﬁnal offer be
‘clearly’ identiﬁed.” Id. As aresult IHS maintains that because “IHS was not put on notice that the

Plaintiffs November 2012 letter was intended as a ﬁnal offer, IHS was under no requirement to

respond within 45 days.” Id.

7 lHS’s interpretation of the word “separate” may be a result of misreading the regulation. In its
initial brief, the defendant misquotes the regulation when it represents that 42 CPR. § 137.132
provides that all ﬁnal offers must “be in a document that is completely separate from a compact . . . .’
Def.’s Mot. 21 (emphasis added). The word “completely” is not in the regulation. See 42 C.F.R.

§ l37.l32(b) (“The document should be separate from the compact . . . .”). This mistake is repeated
in the defendant’s reply, see Def.’s Reply 4, despite the fact that Maniilaq pointed out IHS’s error in

its reply brief, see Pl.’s Reply 9.

3

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Maniilaq responds that IHS is attempting to “stretch” the requirement that an offer be clearly
identiﬁed “well beyond its clear and reasonable meaning.” Pl.’s Reply 10. The regulations do not
specify a manner or place of identiﬁcation. Id. It is true that the citation is not on the ﬁrst page or on
the subject heading of the letter, but Maniilaq’s intentions are still clear. Maniilaq’s letter explicitly
states that the letter was intended as a ﬁnal offer and cites the relevant statutory provision. Pl.’s
Mem. of P. & A. Ex. E 3 (noting that the proposed lease is “submitted in accordance with the ﬁnal
offer provisions of Section 507 of the ISDEAA, 25 U.S.C. § 458aaa—6”). Maniilaq closed the letter
by stating that it “would be happy to discuss these costs and the other terms of the lease with IHS
over the next 45 days.” Id. at 4 (emphasis added). Including that speciﬁc time limit should have
alerted IHS that the statutory clock was ticking. In addition, the letter contains “a description of the
disagreement between [IHS] and [Maniilaq] and [Maniilaq’s] ﬁnal proposal to resolve the
disagreement.” See 42 C.F.R. § 137.133. IHS regulations require this type of description to be
included in a ﬁnal offer, so Maniilaq’s inclusion would be another indication of the letter’s intention.
See Pl.’s Reply ‘10 n5. IHS should have expected a ﬁnal offer to be forthcoming given that the
November 2012 letter was sent following several months of negotiations regarding Maniilaq’s FA
and the inclusion of the lease in particular. See Pl.’s Reply 12~13; Pl.’s Mem. of P. & A. Ex. C. As
the plaintiff points out, an impasse in negotiations of this type is “precisely the circumstance in which
a ﬁnal offer is designed to be, and commonly is, invoked by tribal contractors.” Pl.’s Reply 13.

The Court ﬁnds that the letter was identiﬁed with sufﬁcient clarity to put IHS on notice that
the letter was intended as a ﬁnal offer, and that IHS was in fact on notice of Maniilaq’s intentions. It

is true that Maniilaq could have done more to make its intentions clearer. But the Court is not willing

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to add requirements to the ﬁnal offer process that are not speciﬁed in the regulations. See Cobell v.
Norton, 240 F.3d 1081, 1101 (DC. Cir. 2001) (noting that statutes dealing with tribal rights should
be “construed liberally in favor of the Indians, with ambiguous provisions interpreted to their
beneﬁt”). The content of the letter and the context in which it was sent make it sufﬁciently clear that

Maniilaq intended that the letter be a ﬁnal offer. As Maniilaq notes, “IHS cannot now credibly claim

to have been taken by surprise.” Pl.’s Reply 13.8

2. Whether the type of lease Maniilag proposed may be included in a FA

IHS maintains that even if the offer was properly submitted, the proposed lease is nevertheless
not integrated into Maniilaq’s FA because the ISDEAA only allows documents describing PFSAs to
be incorporated into a FA. Def’s Mem. 2429 (citing 25 U.S.C. § 458aaa—4(d)). Section 458aaa~4(d)
lists the terms that must be included in each FA. For each PFSA, the FA must also describe “the
funds to be provided, including those'funds to be provided on a recurring basis,” 25 U.S.C. § 458aaa~
4(d)(2)(B); “the responsibilities of the Secretary,” id. at § 458aaa-4(d)(2)(D); and “any other
provision with respect to which the Indian tribe and the Secretary agree,” id. at § 458aaa—4(d)(2)(E).

IHS argues a lease is not a PFSA, and therefore IHS lacks statutory authority to include it in
Maniilaq’s FA and was not obligated to respond under the “ﬁnal offer” provisions of 25 U.S.C.
§ 458aaa—6(b). Def’s Mem. 27—29. According to IHS, “[i]n common ordinary language, none of the
terms, programs, services, functions, and activities, are property contracts.” Def’s Mem. 26. IHS
acknowledges § 45 8aaa-4(d)(2)(E) speciﬁcally allows “any other provision with respect to which the

Indian tribe and the Secretary agree,” to be included in the FA. 1d. at 25. However, IHS contends

8 During oral argument, the plaintiff stated that Maniilaq called IHS several times to inquire about the
status of the letter but received no response, an assertion IHS did not deny.

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that the term “provision” is deﬁned as a “clause in a statute, contract, or other legal instrument,” id. at
27 (quoting Black’s Law Dictionary 1240 (7th ed. 1999)), while a lease is “commonly referred to as a
whole contract,” id. Therefore, the argument goes, a lease cannot be a “provision.”

Maniilaq counters that IHS’s interpretation of 25 U.S.C. § 458aaa~4 is overly narrow. Pl.’s
Reply 14. As the plaintiff points out, provisions that cannot be strictly deﬁned as PFSAs have been
included in Maniilaq’s prior FAs. Id. at 15. For example, Maniilaq’s 2008 FA included provisions
authorizing Maniilaq to utilize certain federal property and setting out reporting and maintenance
requirements for that property. Id. at 16; see P1.’s Mem. of P. & A. Ex. K, FY 2008 FA between
Maniilaq and Association and HHS §§ 17-18 [ECF No. 17-13]. Maniilaq acknowledges that it is not
aware of a § 450j(l) lease being included in any previous FA but maintains that a “lease itself is not
meaningfully distinguishable from other types of documents that are routinely attached to and
incorporated into an FA, though such documents, like leases, are not explicitly listed in the statute.”
Pl.’s Reply 15. Maniilaq argues that IHS’s position is “illogical and unconvincing in light of the
Agency’s previous agreements to include the VBC Lease/Construction program in various forms in
the parties’ past FAs.” Id.

Maniilaq persuasively argues that incorporation of the lease into the FA “is simply another
way for Maniilaq to receive funding to carry out the VBC Lease/Construction Program.” P1.’s Reply
15. Put another way, the “program” for the purpose of 25 U.S.C. § 458aaa-4(d)(1) is the VBC
Lease/Construction program. The proposed lease describes “the funds to be provided,” 25 U.S.C.
§ 458aaa-4(d)(2)(B), and “the responsibilities of the Secretary,” id. at § 458aaa—4(d)(2)(D), with

respect to the VBC Lease/Construction Program.

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Maniilaq’s reading of 25 U.S.C. § 458aaa-4(d) is more persuasive, particularly when viewed
in light of other provisions of the ISDEAA. See Maracich v. Spears, 133 S. Ct. 2191, 2203 (2013)
(“It is necessary and required that an interpretation of a phrase of uncertain reach is not conﬁned to a
single sentence when the text of the whole statute gives instruction as to its meaning”) (citing United
States Nat ’1 Bank of Oregon v. Indep. Ins. Agents ofAm., Inc., 508 US. 439, 4.55 (1993)). The
ISDEAA requires that tribes “determine[]” the way in which PFSAs are planned, administered, and
consolidated. 25 U.S.C. § 458aaa—4(b)(l). The ISDEAA also gives tribes some ﬂexibility in
determining how PFSAs are to be funded. A FA under the ISDEAA “authorize[s] the Indian tribe to
. . . receive full tribal share funding, including tribal shares of discretionary Indian Health Service
competitive grants (excluding congressionally earmarked competitive grants) for all programs,
services, functions, and activities (or portions thereof) . . . .” 25 U.S.C. § 458aaa-4(b)(l). The use of
the statutory term “including” indicates that funding for PFSAs may come from a number of
sources.9 See Puerto Rico Mar. Shipping Auth. v. ICC, 645 F.2d 1102, 1112 n.27 (DC. Cir. 1981)
(“It is hornbook law that the use of the word ‘including’ indicates that the speciﬁed list of carriers
that follows is illustrative, not exclusive”).

IHS asserts that the legislative history of the ISDEAA shows that the omission of leases from
the enumerated list of programs, services, functions, and activities was not accidental, because

“Congress purposefully decided that a lease would neither constitute a PFSA nor be a part of a

9 The defendant argues that “[t]he fact that Congress deliberately left out the authority to include

leases in an FA when it carved out a special exemption for grants [in § 458aaa—4(b)(1)] demonstrates
that leases were never meant to be a term or provision of an FA.” Def.’s Mem. 28—29. This assertion

misconstrues the statute. Grants are not “carved out” as a special exemption. Instead, the statute lists
“grants” as one possible source of funding, and nothing in the statute indicates any specific intention

to leave out leases.

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funding agreement.” Def.’s Reply 8. The defendant notes that the mandatory leasing provision in
25 U.S.C. § 4501(1) was enacted in 1994, following a ban on IHS entering into new leases between
1971 and 1992. Def.’s Mem. 25. The defendant argues that the historical restrictions on leases
evidence “Congress’s intent to carefully control IHS’s lease authority,” id., and therefore, “the
omission of ‘lease’ in the statutory deﬁnition of what constitutes an FA under ISDEAA was not a
mistake,” id.

IHS’s argument from legislative history is unconvincing. IHS asks this Court to View
25 U.S.C. § 45 8aaa—4 in light of the “scrutiny that Congress placed on IHS’s granting of leases when
the ISDEAA was enacted” in 1975. Def.’s Mem. 24. But the provisions dealing with FAs were
enacted in 2000, nine years after the ban on leases had ended. See Tribal Self-Governance
Amendments of 2000, Pub. L. No. 106-260, § 4, 114 Stat. 712 (2000) (enacting, inter alia, 25 U.S.C.
§ 458aaa—4). In 1994, between the original enactment of the ISDEAA and the enactment of the
provisions relating to FAs, Congress amended the ISDEAA to require IHS to enter into a lease at the
request of a tribe. See Indian Self-Determination Act Amendments of 1994, Pub. L. No. 103—413,
§ 102(10), 108 Stat. 4253 (1994) (enacting, inter alia, 25 U.S.C. § 450j(l)(1)). Theparties do not
dispute that under 25 U.S.C. § 450j(l)(1), IHS is required to enter into a lease for the Ambler Clinic
(though they do dispute the amount Maniilaq should be compensated). See Def.’s Mem. 30. But IHS
nevertheless maintains that it does not have the statutory authority to include the mandatory lease in a
FA. This argument does not comport with the legislative encouragement of leases (which are
mandatory under § 450j(l)(1)) and FAs (which are deemed accepted as a matter of law if not timely

rejected). The defendant has not demonstrated any reason why this Court should infer that Congress

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speciﬁcally “mean[t] to ‘curtail’ IHS’s leasing authority,” Def.’s Reply 8, by disallowing mandatory

leases under § 450j(l)(l) to be included in a tribe’s FA.

3. Whether the defendant is entitled to remand for another chance to reject
the plaintiff’ s final offer

IHS argues that if this Court ﬁnds that the November 28 letter was a ﬁnal offer, this Court
should remand back to IHS “so that the agency can analyze Plaintiff’ s ﬁnal proposal against the
appropriate statutory criteria,” because IHS mistakenly believed that it did not have to respond to the
plaintiffs letter as a ﬁnal offer. Deﬁ’s Mem. 29—30. The defendant’s request for another opportunity
to consider Maniilaq’s ﬁnal offer is contrary to Congress’s clear intention that IHS is bound by
amendments to FAs that it did not reject within 45 days. See 25 U.S.C. § 458aaa-6(b) (“In the
absence of a timely rejection of the offer, in whole or in part, made in compliance with subsection (c)

of this section, the offer shall be deemed agreed to by the Secretary”) (emphasis added). IHS’S own
regulations confirm that “if the agency takes no action within the 45 day review period,” the ﬁnal
offer is “accepted automatically.” 42 CPR. § 137.136. There is no room in the unambiguous
language for the Court to give an agency another chance to review a ﬁnal offer after the statutory
period has lapsed. See 42 CPR. § 137.137 (“[T]here are no exceptions to this rule [that] if the 45
day review period or extension thereto, has expired, and the T ribe‘s offer is deemed accepted by
operation of law”). The statute therefore requires the Court to ﬁnd that, as a matter of law, the
proposed lease is incorporated into the plaintiffs FA.

Case law from this District conﬁrms that remand is not appropriate. In Seneca Nation of
Indians v. HHS, Judge Collyer found that a tribe’s proposal under another section of the ISDEAA

was deemed accepted when IHS did not respond to a proposal within the statutory time limit, and

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implemented through yearly funding agreements (“FAS”). Def.’s Statement of Material Facts 11 2
[ECF No. 21]. These agreements cover a variety of programs and specify both parties’ obligations
with respect to each program. See generally Pl.’s Mem. of P. & A. Ex. G, FY 2009 FA between

Maniilaq Assoc. and HHS [ECF No. 17—9]. In the 2009 ﬁscal year, Maniilaq received a total of

$35,352,362 from IHS under its FA. Id. at 11.

From October 1985 until January 2003, IHS leased the Ambler Clinic from the village of
Ambler, Alaska. Def.’s Mem. Ex. 1, Poncho Decl. 1111 6-7 [ECF No. 21-1]. In January of 2003,
Maniilaq asked IHS to cancel the VBC lease with the City of Ambler because Maniilaq was taking
ownership of the clinic. Id. at 11 8. At the time Maniilaq took ownership of the clinic, the lease
required IHS to pay the City of Ambler $28,932.16 for the Ambler Clinic and speciﬁed that the City
of Ambler was responsible for the clinic’s maintenance and utilities. Id. at 1111 7—8. At Maniilaq’s
request, the remaining unspent lease funds for the Ambler Clinic were left in Maniilaq’s 2003 FA.
Id. at 11 8. In addition to providing upkeep and maintenance, Maniilaq is required to provide a wide
array of patient care services and programs at the Ambler Clinic. See generally Pl.’s Mem. of P. &
A. Ex. G 2-9 [ECF No. 17-9]. Funding for the Ambler Clinic remained part of each of Maniilaq’s
FAs until 2012, but the amount that Maniilaq received associated with that clinic has not increased
beyond approximately $30,000 per year that IHS had been paying the City of Ambler under the VBC
lease. Poncho Decl. 1111 19-20 [ECF No. 21-1]; Pl.’s Reply 2. According to Maniilaq, this amount is
insufficient to keep up with rising operational costs, and “Alaska Tribal Health Programs that

compact with the IHS . . . have therefore been forced to supplement federal CHAP funding with

millions of dollars annually.” Pl.’_s Mem. of P. & A. 4.

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ordered that the proposed amendments became part of the tribe’s contract without ﬁrst remanding to
the agency. 945 F. Supp. 2d 135, 147~48, 152. The statute triggering automatic acceptance in Seneca
Nation, 25 U.S.C. § 450f(a)(2), states that when a tribe submits a proposed self-determination
contract under the ISDEAA or an amendment to an existing contract, “the Secretary shall, within
ninety days after receipt of the proposal, approve the proposal and award the contract unless the
Secretary provides written notiﬁcation to the applicant” that one of ﬁve statutory reasons for rejection
applies. 25 U.S.C. § 450f(a)(2). The defendant in Seneca Nation also took the position that the
statutory time period was not triggered because the tribe’s submission was not covered by the
relevant statute. Seneca Nation, 945 F. Supp. 2d at 147. But the court found that if HHS wished to
take that position, the agency “should have done so within the statutorily provided 90 days.” Id. at
149. The same principle applies here-«if IHS wanted to take the position that a lease did not belong
in a FA, it should have done so within the statutory time period.10

The defendant expressed concerns that if the lease is incorporated into the plaintiff” s FA, the
plaintiff will “dictate” the terms and cost of the lease. In Seneca Nation, Judge Collyer noted that

automatic acceptance of contracts reﬂected Congress’s intent:

While this system may seem imbalanced, Congress designed self—determination
contracts to work in this manner for a speciﬁc remedial purpose, and the ISDEAA, its
regulations, and the resulting contracts between Indian tribes and the United States
must be read with that remedial intent in mind. By ignoring her deadline, the Secretary

became bound to the proposed Contract amendments.

10 In a previous negotiation, IHS timely rejected a ﬁnal offer from Maniilaq proposing the
incorporation of another lease into Maniilaq’s 2010 Funding Agreement. See Pl.’s Mem. of P. & A.
Ex. 1, Nov. 19, 2009 Letter from IHS Director to President of Maniilaq Assoc. 2 [ECF No. 17-11]. In
that instance, the IHS rejected the proposal on the grounds that “the amount of funds proposed in the
ﬁnal offer exceeds the applicable funding levels” for the PFSAs Maniilaq was to perform. Id. at 3

(quoting 25 U.S.C. § 458aaa—6(c)(l)(A)(i)).
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Seneca Nation, 945 F. Supp. 2d at 152. If IHS had taken the opportunity to reject the offer or
negotiate with the plaintiff during the forty-ﬁve day time period, the terms would not be “dictated” by
the plaintiff. Section 458aaa-6(b) is perfectly clear and speciﬁcally spells out the consequences of
inaction within the statutory time period: “[T]he offer shall be deemed agreed to by the Secretary.”

25 U.S.C. § 458aaa-6(b). If the offer has already been “deemed agreed to,” this Court cannot see

how remand would be consistent with the statute.11

C. Maniilag’s recovery cannot include funds already associated with the
Ambler Clinic already paid under the previous FA

Maniilaq’s ﬁnal offer, which is now incorporated into its 2013 FA, proposed that IHS lease
the Ambler Clinic for $172,536. Pl.’s Mem. of P. & A. Ex. E 4 [ECF No. 17-7]. IHS argues that in
the event that this Court ﬁnds that the proposed § 450j(l) lease does become part of Maniilaq’s 2013
FA, Maniilaq should not receive both the income from the § 450j(l) lease on the Ambler Clinic and
the funds IHS was previously paying Maniilaq pursuant to the VBC program under Maniilaq’s
former FA. Def.’s Mem. 40-41. Maniilaq agrees that it is not entitled to both VBC funding and
proceeds of the § 450j(l) lease. P1.’s Reply 25. IHS informed Maniilaq that the 2013 FA included
$29,932.12 for the Ambler Clinic. Pl.’s Mem. of P. & A. Ex. F 1. Maniilaq represents that it is

prepared to apply this amount as an offset to lease payments owed by IHS “if IHS can demonstrate

H To support its argument that remand is the proper remedy, the defendant heavily relies upon
Aleutian Pribilof Islands Association V. DO], 537 F. Supp. 2d 1 (D.D.C. 2008). Def’s Mem. 29. In
Aleutian Pribilof, the court found the agency had not followed proper procedures when it rejected a
tribal contractor’s request for funds under section l4(h)(1) of the Alaska Natives Claim Settlement
Act. Aleutian Pribilof, 537 F. Supp. 2d at 12—13. The court remanded so that the agency could apply
the appropriate statutes and regulations to the contractor’s proposal. Id. However, the Aleutian
Pribz'lof plaintiffs brought their claims both under the ISDEAA and the APA. Id. at 6. The court
speciﬁcally declined to address the plaintiffs ISDEAA claims, addressing only the proper remedy

under the APA. Id. 6—7.
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that this is the correct amount associated with the Ambler share. . . .” Pl.’s Reply 25. The Court
agrees with the parties that Maniilaq’s recovery is offset by the amount already paid associated with
the Ambler Clinic.

IV. CONCLUSION

The defendant states, and the Court agrees, that “[d]etermining that a ﬁnal offer is ‘deemed
approved’ is a harsh penalty. . . .” Def.’s Mom. 23. But that is the choice that Congress has made.
Ultimately, the defendant can give this Court no reason why it should ignore the clear language of the
statute. Therefore, the Court ﬁnds that the proposed lease of the Ambler Clinic is included in

Maniilaq’s 2013 FA by operation of law.

November 3, 2014 7%]; % 7 '

Thomas F. Hogan /
Senior United States Di '

  

udge

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To address this perceived funding shortfall, in. February of 2012, Maniilaq informed IHS that
it was electing to retrocede the Ambler Clinic back to IHS, Pl.’s Mem. of P. & A. 11, and requested
that IHS enter into a new lease under the mandatory leasing provisions of 25 U.S.C. § 450j(l)(1), see
id. at Ex. C, Feb. 29, 2012 Memorandum to IHS from Maniilaq Assoc. [ECF No. 17—5]. Section
450j(l) requires IHS to lease tribally—owned facilities “used by the Indian tribe or tribal organization
for the administration and delivery of [healthcare] services” upon request of a tribal organization.

25 U.S.C. § 450j(l)(1). Maniilaq would continue to operate the clinic, with proceeds from the lease
funding the PFSAs in Maniilaq’s FA. See Pl.’s Mem. of P. & A. Ex. C [ECF No. 17—5].

In a May 2012 letter, IHS responded and agreed § 450j(l)(1) required it to enter into the lease.
Pl.’s Mem. of P. & A. Ex. D, May 15, 2012 Letter to President/CEO of Maniilaq from Director of
Tribal Programs, AANHS 2 [ECF No 17-6]. However, citing a lack of appropriated funds, IHS
informed Maniilaq that it would pay only “non—monetary” compensation. Id. IHS also informed
Maniilaq that it believed that “leases are not attached to funding agreements by reference or
otherwise.” Id. at 3. IHS took the position that in order to enter into the lease, Maniilaq would have
to submit to the IHS’s Lease Priority System (“LPS”). Id. at 2. IHS and Maniilaq continued to
discuss the Ambler lease but could not come to an agreement.

On November 28, 2012, Maniilaq sent IHS a letter describing the parties’ negotiations and
proposing that IHS enter into a § 450j(D(1) lease for the Ambler Clinic. P1.’s Mem. of P. & A. Ex. E,
Nov. 28, 2012 Letter to Area Director, AANHS, from President/CEO of Maniilaq Assoc. 4 [ECF
No. 17—7] (“November 28 letter”). The letter was four pages long and attached a copy of the

proposed lease. See id. In the ﬁnal paragraph of the third page, Maniilaq wrote: “Enclosed please

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find a proposed lease for the Ambler Clinic, submitted in accordance with the ﬁnal offer provisions
of Section 507 of the ISDEAA, 25 U.S.C. § 45 8aaa~6.” Id. at 3. Maniilaq proposed a lease totaling
$172,536 per year with $66,086 based on “Depreciation,” and $106,450 for “Operation and

maintenance.” Id. at 4.3 The lease would be incorporated into Maniilaq’s 2013 FA, and would be

renewable at the option of either party. See id. at 5—6.

Fifty-eight days after Maniilaq sent the November 28 letter, IHS responded and took the
position that it “does not agree that the lease proposal in your offer may be submitted as a ﬁnal offer
under” 25 U.S.C. § 458aaa—6. Pl.’s Mem. of P. & A. Ex. F, Jan. 25, 2013 Letter to President/CEO of
Maniilaq Assoc. from Director Area Director, AANHS l [ECF No. 17-8]. IHS reiterated its position

that a § 450j(l)(1) lease could not be included in a FA and that Maniilaq had to submit to the LPS.

See id.4

Plaintiff ﬁled suit on March 25, 2013. See Compl. [ECF No. 1]. In its motion for summary
judgment, Maniilaq asks the Court to declare that the lease attached to its November 28 letter is

incorporated into its FA as a matter of law. The defendant cross-moved for summary judgment,

3 The regulations implementing § 450j(l)(1) explain the possible options for compensation for a
§ 450j(l)(l) lease, which include rent, depreciation, operation and maintenance, alterations needed to

make contractual requirements, and “other reasonable expenses.” See 25 C.F.R. §§ 900.70, 900.74.

4 Maniilaq takes the position that under 25 U.S.C. § 458aaa-l6(e), IHS cannot require a tribe to
submit a proposal through the LPS because the LPS is governed by the agency’s Technical
Handbook, and is not a regulation promulgated through IHS’s rulemaking authority. See Def.’s
Mem. 34-40; Pl.’s Reply 30—39. Because this Court ﬁnds that the lease is incorporated into
Maniilaq’s funding agreement due to IHS’S failure to respond during the statutory period, it need not
decide whether IHS could have otherwise compelled Maniilaq to seek a § 450j(l)(1) lease through the
LPS. The Court also need not address the parties’ arguments regarding whether the mandatory

leasing provisions under 25 U.S.C. § 450j(l) give IHS discretion to determine compensation,
including “non-monetary” compensation. See P1.’s Mem. of P. & A. 23-26; Def.’s Mem. 30-34.

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arguing that Maniilaq did not follow the proper procedures for submitting a ﬁnal offer, and even if it
had, a § 450j(l)(1) lease may not be included in a FA.

II. LEGAL STANDARDS

A. Jurisdiction
This Court has subject matter jurisdiction under 28 U.S.C. § 1331 and 25 U.S.C. § 450m——

1(a), which states that “[t]he United States district courts shall have original jurisdiction over any
civil action or claim against the appropriate Secretary arising under [the ISDEAA] and . . . over any
civil action or claim against the Secretary for money damages arising under contracts authorized by
[the ISDEAA].” The ISDEAA does not require plaintiffs to ﬁle an administrative appeal before
bringing suit in district court. See 25 U.S.C. § 458aaa-6(c)(1)(C) (stating that “in lieu of ﬁling” an

administrative appeal, a tribe may “directly proceed to initiate an action in a Federal district court”).

B. Summary Judgment
Summary judgment is appropriate only if the pleadings, depositions, answers to

interrogatories, admissions on ﬁle, and afﬁdavits show that there is no genuine issue of material fact
and that the moving party is entitled to a judgment as a matter of law. See Fed. R. Civ. P. 56; see
also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The party seeking summary
judgment bears the “initial responsibility of informing the district court of the basis for its motion,
and identifying those portions of the pleadings, depositions, answers to interrogatories, and
admissions on ﬁle, together with the afﬁdavits, if any, which it believes demonstrate the absence of a
genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal
quotation marks omitted). To defeat summary judgment, the non—moving party must “designate

speciﬁc facts showing there is a genuine issue for trial.” Id. at 324. There is a genuine issue of a

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material fact “if the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Anderson, 477 US at 247. To determine which facts are material, a court must look to the
substantive law on which each claim rests. Id. at 248.

When both parties cross-move for summary judgment, “neither party waives the right to a full
trial on the merits by ﬁling its own motion; each side concedes that no material facts are at issue only
for the purposes of its own motion.” Vaughan v. Amtrak, 892 F. Supp. 2d 84, 91 (D.D.C. 2012)
(quoting Sherwood v. Washington Post, 871 F.2d 1144, 1148 n.4 (DC. Cir. 1989)). In assessing each
party’s motion, “[a]ll underlying facts and inferences are analyzed in the light most favorable to the

non—moving party.” N.S. ex rel. Stein v. District of Columbia, 709 F. Supp. 2d 57, 65 (D.D.C. 2010)

(citing Anderson, 477 US. at 247).
C. Statutory Interpretation and Indian Law

When interpreting a statute, courts “must ﬁrst determine whether the statutory text is plain
and unambiguous.” Carcieri v. Salazar, 555 US. 379, 387 (2009) (citations omitted). If a court is
interpreting a law relating to the welfare of Indian nations and ﬁnds a provision is ambiguous, courts
are instructed to construe statutes “liberally in favor of the Indians, with ambiguous provisions
interpreted to their beneﬁt” due to the “unique trust relationship between the United States and the
Indians.” Muscogee (Creek) Nation v. Hodel, 851 F.2d 1439, 1444-45 (DC. Cir. 1988) (quoting
Montana v. Blackfeet Tribe, 471 US. 759, 766 (1985)). The DC. Circuit has found that the canon of
construction in favor of Indian tribes can trump the deference to agencies’ interpretations courts

ordinarily give under Chevron and its progeny:

While ordinarily we defer to an agency’s interpretations of ambiguous statutes
entrusted to it for administration, Chevron deference is not applicable in this case. The

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governing canon of construction requires that “statutes are to be construed liberally in
favor of the Indians, with ambiguous provisions interpreted to their beneﬁt.”

Cobell v. Norton, 240 F.3d 1081, 1101 (DC. Cir. 2001) (quoting Blackfeet, 471 US. at 166); see also
Albuquerque Indian Rights v. Lujan, 930 F.2d 49, 59 (DC. Cir. 1991) (declining to defer to the
agency’s interpretation of the governing statute “[b]ased on the special strength of this canon”);
California Valley Miwok Tribe v. United States, 515 F.3d 1262, 1266 n.7 (DC. Cir. 2008).

In enacting the ISDEAA, Congress explicitly codiﬁed the rule of construction in favor of
Indian tribes. The ISDEAA states that “[e]ach provision of [the ISDEAA] and each provision of a
compact or funding agreement shall be liberally construed for the beneﬁt of the Indian tribe
participating in self- governance and any ambiguity shall be resolved in favor of the Indian tribe.”
25 U.S.C. § 45 8aaa-1 1(1). Congress also instructed the agency to interpret the provisions of the

ISDEAA to be inclusive:

Except as otherwise provided by law, the Secretary shall interpret all Federal laws . . .
in a manner that will facilitate-(1) the inclusion of programs, services, functions, and‘
activities (or portions thereof) and funds associated therewith, in the agreements
entered into under this section; (2) the implementation of compacts and funding
agreements entered into under this part; and (3) the achievement of tribal health goals

and objectives.

25 U.S.C. § 458aaa—11(a). These provisions show that Congress intended the ISDEAA to be

implemented in a manner favoring ﬂexibility in funding agreements like the one at issue in this case.

1. Applicable Standard of Review
The parties disagree about what standard of review is appropriate under the ISDEAA.

Maniilaq asserts that that despite the usual presumption of the Administrative Procedure Act’s
“arbitrary and capricious” standard, the statute’s text and legislative history demonstrate that de novo

review should apply to claims under ISDEAA. P1.’s Mem. of P. & A. 14—16; Pl.’s Reply 3—7.

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Maniilaq suggests this Court should follow the reasoning in Shoshone—Bannock Tribes of the Fort
Hall Reservation v. Shalala, 988 F. Supp. 1306 (D. Or. 1997), a case in which the court accepted the
tribe’s argument that the APA standard was inappropriate because:

( 1) the use of the phrase “civil action” in § 450m—1(a) contemplates a trial de novo;

(2) § 450m—l (a) refers to “original jurisdiction” and not “review” or “appeal;” (3) it is

anomalous to obtain full discovery for an ISDEA administrative appeal under 25

U.S.C. § 450f(b)(3), but not in a district court proceeding; (4) the APA bans monetary

damages which the ISDEA expressly allows a district court to award; and (5) the
legislative history of the ISDEA supports a civil trial, rather than review under the

APA.
Pl.’s Reply 4 (quoting Shoshone—Bannock, 988 F. Supp. at 1313). See also Cheyenne River Sioux

Tribe v. Kempthorne, 496 F. Supp. 2d 1059, 1066—67 (D.S.D. 2007) (de novo review appropriate
under the ISDEAA); Cherokee Nation of Okla. v. United States, 190 F. Supp. 2d 1248, 1258 (ED.
Okla. 2001), rev’d on other grounds by Cherokee Nation of Okla. v. Leavitt, 543 US. 631 (2005) (de
novo review appropriate under the ISDEAA).

Citing Citizen Potawatomi Nation v. Salazar, 624 F. Supp. 2d 103, 108 (D.D.C. 2009), IHS
argues that the arbitrary and capricious standard applies to this claim. Deﬁ’s Mem. 16—17. In Citizen
Potawatomi, the court found that the APA standard applied, noting that both the Supreme Court and
the Court of Appeals for this Circuit have found that there is a “strong presumption” that agency
action is governed by the APA standard “when a statute provides for review but does not specify any
standard for that review.” Citizen Potawatomi, 624 F. Supp. 2d at 108—09 (citing United States v.
Carlo Bianchi & Co., 373 US. 709, 715 (1963), Al—Fayed v. CIA, 254 F.3d 300, 304 (DC. Cir.
2001)).

Maniilaq argues that Citizen Potawatomi is distinguishable because the plaintiffs in that case

brought claims under the APA as well as the ISDEAA. Pl.’s Reply 3. Another case in this district
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drew the same distinction. See Seneca Nation of Indians v. HHS, 945 F. Supp. 2d 135, 141 n.5
(D.D.C. 2013) (ﬁnding that Citizen Potawatomi was distinguishable because the plaintiff “brings
claims under only the ISDEAA, as opposed to both the ISDEAA and APA as in Citizen Potawatomi
Nation”). However, the Seneca Nation court did not explicitly ﬁnd that de novo review always
applied to ISDEAA cases, because in that case, the parties agreed that de novo review applied. Id. at
141.

Fortunately, the Court need not reach the issue. As discussed more fully below, this case
turns on the resolution of several legal questions: (1) whether the defendant correctly interprets
42 C.F.R. § 137.132, the regulation setting the procedural requirements for submitting a ﬁnal offer;
(2) whether under the ISDEAA, a lease may be included in a FA; and (3) whether the agency is
entitled to remand if it fails to respond to a ﬁnal offer within the statutory time period. Questions of
law are reviewed de novo under the APA as in ordinary cases. See Citizen Potawatomi, 624 F. Supp.
2d at 114 (“It is well established that de novo review is the appropriate standard for such questions of

law.”); Nebraska HHS v. United States HHS, 340 F. Supp. 2d 1, 12 (D.D.C. 2004) (questions of law

reviewed de novo under the APA).

III. ANALYSIS

A. Funding Agreements and the Final Offer Process under the ISDEAA
Congress enacted the ISDEAA in 1975. See Indian Self—Determination and Education

Assistance Act of 1975, Pub. L. No. 93—638, 88 Stat. 2203. The ISDEAA authorizes Indian tribes
and tribal organizations to assume responsibility for the administration of health related PFSAs that
HHS, through IHS, would otherwise be obligated to provide. 25 U.S.C. § 450f(a)(1). Indian tribes

assume responsibility for these functions by entering into “compacts” with IHS. See 25 U.S.C.
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