Tlingit-Haida Regional Housing Authority v. United States Department of Housing and Urban Development

          ORDER DENYING DEFENDANTS' MOTION FOR RESTITUTION

          Richard P. Matsch, Senior Judge.

         In Defendants' Motion for Restitution filed May 14, 2018, ^[1] the defendants (“HUD”) ask this Court to amend the judgments entered in favor of the Tribes to those amounts that can be considered specific relief from the 2008 grant in compliance with the mandate from the United States Court of Appeals for the Tenth Circuit to the extent that the appellate court reversed this Court's rulings that were the bases for those judgments. See Modoc Lassen Indian Housing Authority v. HUD, 881 F.3d 1181 (10th Cir. 2017).

         The Tenth Circuit panel issued three opinions. All three judges agreed that the agency did not recapture funds pursuant to a statute or regulation that imposed a hearing requirement, reversing this Court's holding to the contrary. They disagreed about the agency's authority to recapture the funds by administrative offset. Judge Moritz and Judge Matheson agreed that neither the statute nor the regulations authorized HUD to recoup the overpayments by offset. They also agreed than no common law precedent gave HUD such authority.

         There was disagreement in characterizing this Court's authority to enter the judgments for recovery of funds. Judge Moritz and Judge Bacharach ruled that these awards were money damages which this Court had no jurisdiction to order because the APA, 5 U.S.C. § 702, does not expressly waive sovereign immunity from such relief. Judge Matheson disagreed, opining that the Tribes were seeking specific relief by enforcing NAHASDA's mandate, making the waiver of sovereign immunity in the APA applicable. He added that payment of the funds may be barred by the Appropriations Clause because HUD can disburse funds only according to the terms of the appropriations it receives from Congress. Since this Court did not determine whether HUD has appropriations available to satisfy the Tribes he suggested remand to address the appropriations issue. Judge Moritz, writing for the majority, said remand was required for “factual findings regarding whether, at the time of the district court's order [to pay the judgments], HUD had the relevant funds at its disposal.” 881 F.3d at 1198-99.

         In a footnote Judge Moritz informed that in post-opinion briefing the parties said that HUD had already complied with the repayment orders. 881 F.3d at 1186-87, n.3. That was accepted but the only comment was that the Tribes never suggested that this compliance implicates HUD's right to appeal. In another footnote Judge Moritz wrote that HUD's argument that it didn't act arbitrarily and capriciously in concluding that the Tribes misreported the number of eligible housing units in their possession was not addressed because HUD lacked authority to recapture the alleged overpayments. 881 F.3d at 1187, n. 4.

         This Court did in fact find that HUD's actions were arbitrary and capricious within the meaning of the APA and that ruling has not been reversed.

         There is no basis for inferring or implying any view from these appellate judges on the question now before this Court - whether equity favors either the Tribes or HUD on the question of restoration of HUD's payments of the judgments during the appeal. There is agreement that this question of restitution is to be decided under the principles of equitable jurisprudence.

         To apply those principles it is necessary to review this litigation from inception.

         The dispute giving rise to this protracted litigation began in 2001 when HUD's Office of Inspector General (OIG) did a nationwide audit of the NAHASDA program implementation.^[2]That statute enacted in 1996, effective October 1, 1997, changed the manner in which HUD had been providing funds to Indian housing authorities through programs under the Housing Act of 1937 through Annual Contributions Contracts. In sum the United States Congress provided annual appropriations to be allocated to Tribes under a formula which relied on the Tribes' submission of information regarding (1) Formula Current Assisted Stock (“FCAS”) and (2) need.

         The audit report contained a conclusion that HUD had not properly allocated funds because grant awards had been based on FCAS counts that included units that ought not qualify for assistance. Particularly, the OIG faulted HUD for failing to enforce compliance with 24 C.F.R. § 1000.318 by accepting inclusion of units that should no longer be considered owned or operated by the Tribes. Emphasis was on units that were under rent-to-buy contracts whereby the occupant could obtain conveyance of title after paying for 25 years.

         In September 2001, HUD notified Fort Peck Housing Authority (“Fort Peck” or “FPHA”) that it may have received grant overpayments because 238 homeownership units had been included in its FCAS for years 1998, 1999, 2000, and 2001. Letters were exchanged resulting in HUD's claim that Fort Peck had received overfunding for fiscal years 1998 through 2002 for a total of $1, 767, 276.00. Fort Peck paid $513, 354.00 in 2002.

         On October 3, 2002, counsel for Fort Peck challenged the claim of overpayment and requested a hearing. By letter of January 3, 2003 the Deputy Assistant Secretary for Native American Programs advised counsel that the procedures being followed by regulation do not provide for a hearing. After a site visit, HUD reduced the amount claimed to be owed to $786, 996.00. The position taken by HUD was that after 25 years, the rent-to-own units should be conveyed and refused to allow Fort Peck to retain units on its inventory without showing good cause.

         After written protests from Fort Peck's counsel, the Assistant Secretary for Public and Indian Housing issued a letter denying counsel's arguments. That letter was taken to be a final agency decision for which Fort Peck sought judicial review under the APA by filing Civil Action No. 05-cv-00018-RPM.

         By Memorandum Opinion and Order on May 25, 2006, this Court held that the regulation 1000.318 under which HUD acted conflicted with the statute, 25 U.S. § 4152(b)(1), and was therefore invalid. HUD's calculation ...