878 F.3d 889
10th Cir.2017Background
- HUD distributes annual NAHASDA block grants to tribes based on reported eligible low-rent housing units (FCAS); tribes allegedly overstated unit counts and received overpayments.
- HUD recouped alleged overpayments by deducting amounts from tribes’ subsequent NAHASDA allocations (administrative offset); tribes sued for return of funds in district court.
- District court held HUD acted illegally by recapturing funds without providing required administrative hearings and ordered repayment; HUD appealed.
- Panel unanimously held the specific statutes and regulations the tribes relied on (24 C.F.R. §1000.532; 25 U.S.C. §4161/§4165) did not apply, so no statutory hearing was required.
- The panel split on two other issues: (1) whether HUD had common-law authority to recapture by offset (majority: no; concurrence: yes), and (2) whether sovereign immunity barred the district court from ordering repayment from sources other than the original appropriations (majority: yes in part; Matheson concurrence: no, §702 waives immunity for specific relief and appropriations issues are for remand).
Issues
| Issue | Plaintiff's Argument (Tribes) | Defendant's Argument (HUD) | Held |
|---|---|---|---|
| 1. Were administrative hearings required before HUD recaptured funds under statutes/regulations? | Reading of 24 C.F.R. §1000.532 and 25 U.S.C. §4161 requires hearings when HUD acts under audit/review or finds substantial noncompliance. | HUD: those provisions do not cover FCAS reporting/offsets here, so no hearing requirement applied. | Held: No hearings required — statutes/regulations relied on do not apply to HUD’s FCAS-based recaptures. |
| 2. Did HUD have authority to recoup alleged overpayments via administrative offset under common law (payment-by-mistake / offset)? | Tribes: HUD lacked statutory authority and cannot invoke common-law offset to adjust NAHASDA allocations. | HUD: longstanding common-law power permits agencies to recover mistaken payments by offset without suing. | Held (majority): HUD lacked common-law authority to recoup NAHASDA grants by unilateral offset in this context; district court properly characterized recaptures as illegal. (Concurrence disagrees.) |
| 3. Could the district court order HUD to repay tribes who had been recouped? (sovereign immunity / §702) | Tribes: district court can order repayment to enforce statutory entitlement; relief is specific, not money-damages, so §702 waives immunity. | HUD: ordering repayment from other funds is effectively an award of money damages barred by sovereign immunity. | Held (majority): To the extent the ordered repayment required HUD to substitute funds from other years/ sources (not the specific appropriations still available), that relief is money damages barred by §702; remand for factual findings about whether relevant funds remained. (Judge Matheson would treat relief as specific under Bowen and remand on appropriations availability.) |
| 4. If sovereign immunity does not bar relief, are there Appropriations Clause limits on repayment? | Tribes: NAHASDA funds are effectively no‑year / fungible for program purposes; repayment can be satisfied from NAHASDA resources. | HUD: appropriations for the particular fiscal years may have lapsed or been obligated to others so funds may not be available to satisfy repayment. | Held: Panel remanded for district court factfinding on whether HUD had the specific appropriated funds available; if not, using other appropriations may constitute money-damages or violate appropriations constraints. |
Key Cases Cited
- Crow Tribal Housing Auth. v. Dep’t of Hous. & Urban Dev., 781 F.3d 1095 (9th Cir. 2015) (held HUD’s FCAS review treated as audit under §4165; discussed hearing requirement issues)
- Fort Belknap Hous. Dep’t v. Office of Pub. & Indian Hous., 726 F.3d 1099 (9th Cir. 2013) (NAHASDA allocation/offset background; zero-sum funding context)
- United States v. Wurts, 303 U.S. 414 (1938) (recognized government’s long-standing right to recover wrongful payments; central to debate over need for suit vs offset)
- Grand Trunk W. R.R. Co. v. United States, 252 U.S. 112 (1920) (permitted government to deduct overpayments against amounts owed under continuing contracts)
- United States v. Munsey Trust Co., 332 U.S. 234 (1947) (contract-based contexts where administrative recoupment was sustained)
- Bowen v. Massachusetts, 487 U.S. 879 (1988) (§702 waiver: distinguishes specific relief enforcing statutory payment mandates from money-damages)
- Dep’t of the Army v. Blue Fox, Inc., 525 U.S. 255 (1999) (clarified §702 analysis: award that functions as substitute monetary relief can be barred by sovereign immunity)
- City of Houston v. Dep’t of Hous. & Urban Dev., 24 F.3d 1421 (D.C. Cir. 1994) (held expired/obligated appropriations can preclude specific relief; treating repayment from other funds as money damages)
- County of Suffolk v. Sebelius, 605 F.3d 135 (2d Cir. 2010) (discussed appropriation‑based limits on recovery and §702 interplay)
- Bechtel v. Pension Benefit Guar. Corp., 781 F.2d 906 (D.C. Cir. 1985) (recognized agencies’ ability to adjust ongoing payments to recoup overpayments under common-law principles)