864 F.3d 1212
10th Cir.2017Background
- HUD allocates yearly NAHASDA block grants to tribes based on each tribe’s reported eligible low-rent housing units (FCAS); misreporting can produce overpayments that reduce funds for other tribes.
- HUD discovered alleged overreports by several tribes and recouped the sums by deducting amounts from subsequent years’ NAHASDA allocations (administrative offset).
- The tribes sued under the APA, arguing HUD lacked authority to recapture funds without first providing administrative hearings and that HUD otherwise lacked authority to offset the funds at all.
- The district court agreed that HUD needed to provide hearings and ordered HUD to restore the recaptured funds; HUD appealed.
- The panel unanimously held HUD was not required to hold hearings under the cited statutory/regulatory provisions, but the panel split on whether HUD had authority to recoup by offset and on whether the tribes could recover money if HUD no longer held the original appropriations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HUD had to provide administrative hearings before offsetting alleged NAHASDA overpayments | Tribes: §4161 and 24 C.F.R. §1000.532 (and related regs) require hearings for reductions/adjustments | HUD: neither §4161 nor §1000.532 applies to offsets based on FCAS reporting, so no hearing required | Held: HUD was not required to provide hearings under those provisions (unanimous) |
| Whether HUD acted pursuant to §4165 audit/review authority when examining tribes’ reported FCAS | Tribes: HUD’s FCAS reviews are audits under §4165, triggering §1000.532 procedures | HUD: “eligible activities”/“certifications” statutory definitions don’t encompass FCAS reporting; FCAS reporting is governed by separate Formula Response Form/regulations | Held: FCAS reviews do not fall within §4165 categories; §1000.532 and §4165 do not apply |
| Whether HUD had common-law authority to recoup overpayments via administrative offset (without suit) | Tribes: government may sue to recover mistaken payments but lacks common-law authority to unilaterally offset NAHASDA grant payments | HUD: long-standing common-law right permits administrative offset to recover mistaken payments | Held: Majority: HUD lacked common-law authority to offset NAHASDA grants here (panel split; two judges would reach opposite conclusion) |
| Whether the district court could order HUD to repay tribes where HUD no longer holds the specific original-year appropriations (sovereign immunity / §702 waiver) | Tribes: relief is enforcement of statutory entitlement (specific relief) so APA §702 waives sovereign immunity and repayment may be ordered | HUD: if original appropriation funds are expended to others, ordering repayment from other sources is effectively money damages barred by sovereign immunity and constrained by Appropriations Clause | Held: Panel split — two judges held sovereign immunity bars ordering substitute monetary payment if original-year funds no longer available and remanded for factual findings about availability; one concurrence would treat relief as specific and remand to resolve appropriations availability |
Key Cases Cited
- United States v. Wurts, 303 U.S. 414 (government has long-established right to recover wrongful payments)
- Grand Trunk W. R.R. Co. v. United States, 252 U.S. 112 (government may deduct overpayment from later contractual payments)
- United States v. Munsey Trust Co., 332 U.S. 234 (contract-based context allowing government setoff)
- Bowen v. Massachusetts, 487 U.S. 879 (§702 waiver covers suits enforcing statutory payment mandates; distinction between specific relief and money damages)
- Department of the Army v. Blue Fox, Inc., 525 U.S. 255 (§702 bars suits seeking substitutionary monetary relief; function of remedy controls)
- Crow Tribal Hous. Auth. v. HUD, 781 F.3d 1095 (9th Cir.) (held HUD’s FCAS review can be an audit under §4165 — court distinguishes and disagrees on statutory scope)
- Fort Belknap Hous. Dep’t v. Office of Pub. & Indian Hous., 726 F.3d 1099 (9th Cir.) (discussed NAHASDA allocation issues; Court’s reasoning limited as to common-law offset authority)
- City of Houston v. Dep’t of Hous. & Urban Dev., 24 F.3d 1421 (D.C. Cir.) (approach treating relief from other-appropriation sources as money damages/mootness due to lapsed/obligated appropriation)
- County of Suffolk v. Sebelius, 605 F.3d 135 (2d Cir.) (similar treatment of appropriations/res availability and effect on relief)
- Lummi Tribe of Lummi Reservation v. United States, 106 Fed. Cl. 623 (Fed. Cl.) (construed §4165 broadly to include FCAS reviews — disagreed with by this panel)