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Argument recap: How to undo a dumb thing?


No one suggested during a Supreme Court hearing that Congress had done a dumb thing in the way it has treated Indian tribes as partners (the most critical comment was that Congress had acted in a “schizophrenic” way), but sheer irrationality was what seemed to be troubling the Justices. On the one hand, Congress told the government it had to accept every contract offered by an Indian tribe to provide government services.  But, on the other hand, it said every year that the government could not pay for everything it got in return.   On Wednesday, the Court was trying to figure out what to do about that — other than simply handing the problem back to Congress (an option that did get discussed). The argument came in the case of Salazar v. Ramah Navajo Chapter, et al. (docket 11-551)

Congress had in mind what it considered a noble goal when it passed the Indian Self-Determination Act in 1975: it would let Indian tribes run government services for their members, taking the government’s place, and get paid for it — in full, it supposedly was understood.   But, beginning in 1994, the lawmakers started an annual process of putting a spending cap on what the government would finance in the tribes’ administrative costs in running such programs.  And, at least some of the time, the caps would cut off funds before some tribes got paid all they were owed.

For an hour Wednesday, the Court tried to figure out how this was supposed to work, with one Justice, Stephen G. Breyer, almost tying himself in verbal knots as he tried to sort it out.  Perhaps in exasperation, Justice Sonia Sotomayor suggested at one point: “So, why don’t we let Congress fix it?”

Each time a member of the Court told the government’s lawyer, Mark R. Freeman, that Congress was reneging on its promises, Freeman tried to persuade the Court otherwise, but the Justices either did not believe him, or did not understand him.   Government contracting, it turns out, is not a simple thing, and Freeman did not pretend that it was.  Increasingly, for the Justices, it looked as if complexity simply meant unfairness.

The argument grew so convoluted that the Court had to struggle to understand what Congress actually meant when it used the phrase “not to exceed” X dollars as a way of notifying the Bureau of Indian Affairs not to spend more than had been voted in an appropriations bill, no matter what it had promised to pay under contract.   It made sense to Freeman, who said that the tribes were put on notice of the caps by wording in their contracts that their payment was “subject to the availability of appropriations.”   The Justices, though, were not so sure.

The difficulty for the government argument was that a federal court in 1892 had created what is called “the Ferris doctrine,” specifying that government contractors cannot be expected to know, when they sign up, whether the government is going to watch its funds closely enough to make sure that there is enough to go around and pay everybody what they have been promised.  As the Justices on Wednesday pored over the actual workings of government contracting with Indian tribes, they appeared to conclude that the government was trying to have it both ways: obey Congress’s spending caps and yet have no obligation to pay off the tribes in full.

Chief Justice John G. Roberts, Jr., suggested that tribes might want to protect themselves from that kind of financial fate by seeking more in contract commitments at the outset than they actually expected in the end, so that they would wind up after the congressional cut with what they believed their costs required.  But he was told that would be illegal, since there are limits on what a government contractor can seek in a commitment — another aspect of what often seemed like a “Catch 22” enterprise.

Although the Constitution makes it very clear that no money can come out of the Treasury without Congress’s explicit approval, not a word was heard during the argument that the Court believed that was an excuse for Congress to leave the tribes partly uncompensated after they had upheld their side of the bargain.   As the argument wore on, it appeared that the Justices might well conclude that the tribes did need a guaranteed way to obtain what they were owed, and that might mean access to something called the “Judgment Fund.”  That is a special kitty that pays off when the government loses a damages claim in court, and it does not depend upon annual appropriations.  Justice Anthony M. Kennedy, for one, suggested that the tribes could tap into that Fund.

The government has argued that the Judgment Fund is not available unless the government breaches its contract obligations, and it has insisted it did not do so with the tribes.  But the tenor of the argument on Wednesday appeared to suggest that a breach was perhaps what had actually befallen the tribes.

The tribes’ lawyer, Washington attorney Carter G. Phillips, came prepared to use “the Ferris doctrine” to his clients’ advantage, but had to spend much of his time trying to explain how the tribes really had not been put on notice that they were at risk of not getting paid in full for their costs of running government programs for the government.  Justice Breyer dominated much of the tribes’ side of the argument by pressing repeatedly to be told why he was wrong in assuming that the tribes knew what they were in for.

The overall thrust of Phillips’ argument was that it was the government’s problem if, on the one hand, it signed all of those contracts with tribes and then could not pay in full because Congress put in place a series of annual spending caps.   If Congress wants to fix the problem, the tribes’ counsel said, it could do so “in a heartbeat” — simply by repealing the government’s obligation to join in every contract that a tribe offered to it.

Wisely, Phillips also sought to portray the situation as far broader than the special case of the tribes and their self-determination contracts.  He suggested, relying on a U.S. Chamber of Commerce amicus brief, that every contractor who does business with the government operates upon “an article of faith” that the government will keep its word.

If Congress does not change the special system of dealing with Indian tribes, Phillips said, the tribes’ remedy is to file a lawsuit claiming breach of contract.

It was Phillips who suggested that the existing system with the tribes was “schizophrenic,” but he said it with an apology.  What was more cutting, though, was a remark he made that reinforced the notion that this special system was, indeed, just dumb.   Phillips said it was “a difficult concept to sort of wrap your mind around” that Congress would have passed a law that ordered an official to enter into a contract that, in the end, could require a federal official to violate a criminal law (the Anti-Deficiency Act) that forbids government officials from spending money that the government didn’t have.







Recommended Citation: Lyle Denniston, Argument recap: How to undo a dumb thing?, SCOTUSblog (Apr. 18, 2012, 2:44 PM),