Date: 05-09-2011

Case Style: Ramah Navajo Chapter v. Kenneth Salazar

Case Number: 08-2262

Judge: Lucero

Court: United States Court of Appeals for the Tenth Circuit on appeal from the District of New Mexico (Bernalillo County)

Plaintiff's Attorney: Michael Paul Gross, Esq., M. P. Gross Law Firm, P.C., Santa Fe, New Mexico (C. Bryant Rogers, VanAmberg, Rogers, Yepa, Abeita & Gomez, LLP, Santa Fe, New Mexico; and Lloyd Benton Miller, Sonosky, Chambers, Sachse, Miller & Munson, Anchorage, Alaska with him on the briefs) for Plaintiffs-Appellants.

Defendant's Attorney: John Samuel Koppel, Appellate Staff, Civil Division (Tony West, Assistant Attorney General; Gregory J. Fouratt, U.S. Attorney; and Barbara C. Biddle, Appellate Staff, Civil Division, with him on the briefs) U.S. Department of Justice, Washington, DC, for Defendants-Appellees.

Geoffrey D. Strommer and Stephen D. Osborne, Hobbs, Straus, Dean & Walker, LLP, Portland, Oregon, and John Dossett, General Counsel, National Congress of American Indians, Washington, D.C., filed an Amicus Curiae brief for National Congress of American Indians, in support of Plaintiffs-Appellants.

Description: We are faced with an apparent contradiction. Pursuant to the Indian Self- Determination and Education Assistance Act (“ISDA”), the United States enters into self determination contracts with Indian tribes and tribal organizations “for the planning, conduct and administration of programs or services which are otherwise provided to Indian tribes and their members pursuant to Federal law.” 25 U.S.C. § 450b(j). These agreements include contract support costs (“CSCs”) which are the “reasonable costs for activities that must be carried on by a tribal organization as a contractor to ensure compliance with the terms of the contract and prudent management,” but would not be paid by the Secretary of the Interior if the federal government operated the contracted program directly. § 450j-1(a)(2). Congress has mandated that all self-determination contracts provide full funding of CSCs, see § 450j-1(g), but has nevertheless failed to appropriate funds sufficient to pay all CSCs every year since 1994, instead capping appropriations at a level well below the sum total of CSCs. See, e.g., Dep’t of the Interior & Related Agencies Appropriations Act, 1995, Pub. L. No. 103-332, tit. I, 108 Stat. 2499, 2511 (1994).

These funding shortfalls have threatened tribal programs designed to fulfill the congressionally mandated goal of the ISDA to “enhance the progress of Indian people and their communities.” 25 U.S.C. § 450(a)(1). Contracts for programs absolutely essential to self-government, such as law enforcement, economic development, and natural resource management, have become “unworkable” in the words of a tribal representative. As a result, several tribes and tribal organizations brought suit seeking to collect the promised, but unappropriated, CSCs.

The government urges us to affirm the district court and resolve the ISDA/appropriations contradiction by holding that the phrase “subject to the availability of appropriations,” included in both the ISDA, see § 450j-1(b), and all self-determination contracts, see § 450l(c), unambiguously eliminates the government’s obligation to pay CSCs unless Congress appropriates funds to pay all CSCs on every self-determination contract. Plaintiffs counter that the phrase “subject to the availability of appropriations” must be interpreted from the perspective of the individual contractor, not by reference to all contractors who might lay claim to a given appropriation. In other words, only Congressional funding decisions—not discretionary allocation decisions made by an agency—can render an appropriation unavailable.

Following a recent Supreme Court case addressing a nearly identical issue, we conclude that plaintiffs’ interpretation is reasonable. As the Court held in Cherokee Nation of Oklahoma v. Leavitt, 543 U.S. 631 (2005), “if the amount of an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose or assumes other obligations that exhaust the funds.” Id. at 641 (quotation omitted). Following our canon of construction requiring that an act be construed in favor of a reasonable interpretation advanced by a tribe, see Ramah Navajo Chapter v. Lujan, 112 F.3d 1455, 1462 (10th Cir. 1997), and the ISDA’s requirement that contracts be construed in favor of the contractor, 25 U.S.C. § 450l(c), we hold that the government remains liable because the annual CSC appropriations were sufficient to cover any individual contract.

Exercising jurisdiction under 28 U.S.C. § 1291, we reverse the district court’s grant of summary judgment in favor the government and remand for further proceedings.

I

This appeal comes after nearly two decades of litigation under the ISDA by Ramah Navajo Chapter (“Ramah”). The statutory and administrative landscape provides an important backdrop for our legal analysis.

A

Prior to the ISDA, educational and governmental services were provided directly by the federal government to the hundreds of federally recognized tribes in the United States. Acknowledging that “Federal domination of Indian service programs has served to retard rather than enhance the progress of Indian people,” 25 U.S.C. § 450(a)(1), Congress enacted the ISDA to “permit an orderly transition from the Federal domination of programs for, and services to, Indians to effective and meaningful participation by the Indian people in the planning, conduct, and administration of those programs and services,” § 450a(b). The ISDA reaffirms the “Federal Government’s unique and continuing relationship with, and responsibility to, individual Indian tribes and to the Indian people as a whole.” § 450a(a). It pursues a goal of Indian “self-determination by assuring maximum Indian participation in the direction of educational as well as other Federal services to Indian communities so as to render such services more responsive to the needs and desires of those communities.” Id.

Pursuant to the ISDA, the Secretary of the Interior and the Secretary of Health and Human Services are directed to enter into self-determination contracts upon the request of a tribe, provided that the request satisfies several statutory criteria. See §§ 450b(i), 450f(a). The Secretary must provide the amount that the agency “would have otherwise provided for the operation of the programs or portions thereof for the period covered by the contract.” § 450j-1(a)(1). These contracts effectively transfer responsibility for various programs from federal agencies to the tribes themselves, while maintaining federal funding of the programs.

Congress soon recognized that providing only the funds the Secretary would have spent operating a given program created a “serious problem” because those funds do not cover “federally mandated annual single-agency audits, liability insurance, financial management systems, personnel systems, property management and procurement systems and other administrative requirements.” S. Rep. No. 100-274, at 8 (1987), reprinted in 1988 U.S.C.C.A.N. 2620, 2627. As a result, tribal resources “which are needed for community and economic development must instead be diverted to pay for the indirect costs associated with programs that are a federal responsibility.” Id. at 9, reprinted in 1988 U.S.C.C.A.N. at 2628. Congress accordingly amended the ISDA to require full funding of CSCs. See Indian Self Determination Act Amendments of 1987, Pub. L. No. 100-472, § 205, 102 Stat. 2285, 2292-94 (1988).

CSCs include “direct program expenses for the operation of the Federal program that is the subject of the contract,” 25 U.S.C. § 450j-1(a)(3)(A)(i), and “any additional administrative or other expense related to the overhead incurred by the tribal contractor in connection with the operation of the Federal program, function, service, or activity pursuant to the contract,” § 450j-1(a)(3)(A)(ii). The latter category appears to correspond to “indirect costs” which are defined as the “costs incurred for a common or joint purpose benefiting more than one contract objective, or which are not readily assignable to the contract objectives specifically benefited without effort disproportionate to the results achieved.” § 450b(f). Indirect costs are generally calculated by multiplying the “contract funding base” by the “indirect cost rate,” a negotiated figure. See § 450b(b), (g); S. Rep. No. 100-274, at 9, reprinted in 1988 U.S.C.C.A.N. at 2628 (“Tribal indirect cost rates are negotiated and approved according to OMB guidelines by the Department of the Interior Office of Inspector General.”).

Under the revised ISDA, CSC funding “shall be added to the amount” the Secretary would have spent on the program subject to a self-determination contract. 25 U.S.C. § 450j-1(a)(2) (emphasis added). Another section of the ISDA provides that “[u]pon the approval of a self-determination contract, the Secretary shall add to the contract the full amount of funds to which the contractor is entitled under [§ 450j-1(a)].” § 450j-1(g) (emphasis added). However, the ISDA twice states that entitlement to selfdetermination contract funding is “subject to the availability of appropriations.”

§§ 450j(c)(1), 450j-1(b). It further provides that “the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under this [Act].” § 450j-1(b).

The phrase “subject to the availability of appropriations” has become highly significant because of Congress’ ISDA funding decisions. In 1994, Congress began capping CSC funding. The 1994 appropriations act for the Department of the Interior allocated nearly $1.5 billion to the Bureau of Indian Affairs (“BIA”), but provided that “not to exceed $91,223,000 of the funds in this Act shall be available for payments to tribes and tribal organizations for indirect costs associated with contracts or grants or compacts authorized by the Indian Self-Determination Act.” Dep’t of the Interior & Related Agencies Appropriations Act, 1994, Pub. L. No. 103-138, tit. I, 107 Stat. 1379, 1390-91 (1993). The Conference Report on the appropriations bill suggested Congress was apprehensive about the growth of CSCs:

The managers remain very concerned about the continued growth in contract support costs, and caution that it is unlikely that large increases for this activity will be available in future years’ budgets. It is also a concern that significant increases in contract support will make future increases in tribal programs difficult to achieve.

H.R. Conf. Rep. No. 103-299, at 28 (1993). A Senate Report accompanying the following year’s appropriations act noted “that significant shortfalls exist for fiscal year 1994 contract support funding,” but advised that the “shortfalls should be treated as onetime occurrences and should not have any impact on determining future indirect cost rates.” S. Rep. No. 103-294, at 57 (1994).

Despite this expectation, funding shortfalls for CSCs were repeated every fiscal year from 1994 to 2001. Later appropriations acts, usually passed at the beginning of the fiscal year, used the phrase “contract support costs” rather than “indirect costs,” but each included the same “not to exceed” language. See tit. I, 108 Stat. at 2511; Omnibus Consol. Rescissions & Appropriations Act of 1996, Pub. L. No. 104-134, 110 Stat. 1321, 1321-170 (1996); Omnibus Consol. Appropriations Act, 1997, Pub. L. No. 104-208, 110 Stat. 3009, 3009-192 (1996); Dep’t of the Interior & Related Agencies Appropriations Act, 1998, Pub. L. No. 105-83, tit. I, 111 Stat. 1543, 1554 (1997); Omnibus Consol. & Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, 112 Stat. 2681, 2681-245 (1998); Consol. Appropriations Act, 2000, Pub. L. No. 106-113, 113 Stat. 1501, 1501A-148 (1999); Dep’t of the Interior & Related Agencies Appropriations Act, 2001, Pub. L. No. 106-291, tit. I, 114 Stat. 922, 934 (2000).

B

Following the passage of each appropriations act, the BIA issued a notice in the Federal Register discussing the CSC shortfalls. The 1994 notice warned of “a shortfall of at least $ 10,000,000 in FY 1994 and possibly a shortfall as high as $ 25,000,000.” Distribution of Fiscal Year 1994 Contract Support Funds, 58 Fed. Reg. 68,694, 68,694 (Dec. 28, 1993). It also reminded tribal contractors that the BIA “can only utilize the amount appropriated for the [CSC] account to meet indirect cost needs.” Id. Because of the projected shortfall, the BIA requested “a report showing the amounts provided to cover prior year shortfalls, the amounts and percentages funded for current year contracts and a revised detailed need request” from each area office. Id. The agency hoped to provide instructions “advising each area of the level to be applied to each contract,” around May 1, 1994. Id.

Notices published for subsequent years similarly requested interim reports on CSC need at some point during the operative fiscal year. After receiving the reports, and well into the fiscal year for which funding was provided, the BIA would calculate the amount of the shortfall and provide CSC funding on a uniform, pro-rata basis. See Distribution of Fiscal Year 1995 Contract Support Funds, 59 Fed. Reg. 55,318 (Nov. 4, 1994); Distribution of Fiscal Year 1996 Contract Support Funds, 61 Fed. Reg. 16,106 (Apr. 11, 1996); Distribution of Fiscal Year 1997 Contract Support Funds, 62 Fed. Reg. 1468 (Jan. 10, 1997); Distribution of Fiscal Year 1998 Contract Support Funds, 63 Fed. Reg. 5398 (Feb. 2, 1998); Distribution of Fiscal Year 1999 Contract Support Funds, 64 Fed. Reg. 2658 (Jan. 15, 1999); Distribution of Fiscal Year 2000 Contract Support Funds, 65 Fed. Reg. 10,100 (Feb. 25, 2000); Distribution of Fiscal Year 2001 Contract Support Funds, 66 Fed. Reg. 15,275 (Mar. 16, 2001).

The Department of Interior appropriation for fiscal year 1995, for example, was passed on September 30, 1994, the last day of fiscal year 1994. The BIA requested initial reports of CSC need by December 1, 1994. Distribution of Fiscal Year 1995 Contract Support Funds, 59 Fed. Reg. 55,318 (Nov. 4, 1994). After receiving these initial reports, the BIA disbursed 75 percent of the total amount reported. Id. It requested a second set of reports by July 10, 1995, and planned a final distribution of the remainder of CSC funds well into the fiscal year—“on or about July 31, 1995 [ten months into the fiscal year], on the basis of these reports.” Id. “If the reports indicate that [the appropriated sum] will not be sufficient to cover the entire need, this amount will be distributed so that all offices receive the same percentage of their reported need for distribution at this same percentage.” Id. The BIA funded 91.74 percent of the actual CSCs on each selfdetermination contract in fiscal year 1995. Between 1994 and 2004, the CSC funding rate ranged from 77 to 93 percent for each fiscal year.

C

Plaintiffs Ramah and the Oglala Sioux Tribe (“Oglala”) are parties to long-term “mature” self-determination contracts of indefinite duration with the United States pursuant to the ISDA. See 25 U.S.C. § 450b(h). Like all self-determination contracts, plaintiffs’ agreements expressly incorporate the ISDA. They further provide that the ISDA and “each provision of this contract shall be liberally construed for the benefit of the contractor.” A section titled “FUNDING AMOUNT” states:

Subject to the availability of appropriations, the Secretary shall make available to the Contractor the total amount specified in the annual funding agreement incorporated by reference in subsection (f)(2). Such amount shall not be less than the applicable amount determined pursuant to section 106(a) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450j-1).

The annual funding agreements (“AFAs”), incorporated by reference in the mature contracts, describe attachments containing “terms that identify the programs, services, functions, and activities to be performed or administered, the general budget category assigned, the funds to be provided, and the time and method of payment.” As their name implies, AFAs are renegotiated each year. Like the main self-determination contracts, AFAs include language discussing the availability of appropriations.

Ramah’s 2000 AFA2 sets out “Tentative FY 2000 Funding” for various programs and activities “using FY 99 funding levels.” The AFA also uses a tentative indirect cost rate, adopting the last rate approved by the Office of Inspector General, which occurred in calendar year 1998.3 The AFA explains:

Indirect Cost rate[s] for Calendar Year 1999 and 2000 have not been completed yet with the Office of Inspector General. As of the date of submittal of this AFA, neither has the Chapter completed its Calendar Year 2000 Indirect Cost proposal. The last approved IDC rate was for CY 1998 at 86.4%. Based on this last approved rate, Ramah Navajo Chapter requests that the CY 1998 IDC negotiated final rate be used to temporarily fund IDC at 100% level. NOTE*: (Funding of the amount shall be subject to the availability of appropriation. . . .). As soon as funding has been appropriated and sub-allotted to the Ramah Navajo Agency, funds will be added to the AFA.

(i) Direct Contract Support Costs are to be negotiated within the first ninety, (90) days of the new contract term and shall be funded from the BIA’s Indian Self-Determination Fund as soon as resources can be made available, but not later than September 30, 2000. The Contractor reserves the right to annually renegotiate its need for Direct Contract Support Costs in accordance with Sec. 106(a)(3)(B) of the Act [25 U.S.C. § 450j- 1(a)(3)(B)]. Funding of the amount needed shall be subject to the availability of appropriations.

(ii) Outstanding Indirect Cost issues from past fiscal years which Ramah Navajo Chapter has not received will be subject to continuing discussion until resolved.

. . . .

. . . Funding for additional contract support costs shall be added to the AFA for the Contractor which includes Indian Self-Determination Fund direct and indirect type costs. The amount of Indirect Cost Funding shall be based upon the Contractor’s Indirect Cost Agreement which is applicable to this period of performance.

As these provisions make clear, Ramah faced two levels of uncertainty at the time it entered into the AFA. First, the indirect cost rate was subject to negotiation and approval by the Office of Inspector General, meaning that the amount of the contract was undetermined. Second, even after the amount of the AFA was finalized, the actual payment forthcoming from the BIA was unknown because the agency did not determine the CSC funding rate until the fiscal year was well underway. Ramah did not receive notice of the exact amount of contract funding until the last month of each fiscal year. As an accounting consultant to Ramah and Oglala describes it, this system “allowed one party to the contract, the government, to set the price after the service has been performed by the other party.”

D

Ramah originally brought this class action in 1991 seeking to alter the manner in which the BIA calculated indirect cost rates. After this court held in favor of plaintiffs, see Ramah Navajo Chapter, 112 F.3d at 1455, the parties entered into several partial settlement agreements, see Ramah Navajo Chapter v. Norton, 250 F. Supp. 2d 1303 (D.N.M. 2002); Ramah Navajo Chapter v. Babbitt, 50 F. Supp. 2d 1091 (D.N.M. 1999). During these settlement negotiations, Oglala intervened as plaintiffs. The Pueblo of Zuni also intervened later in the proceedings.

This appeal arises from a motion for summary judgment filed by plaintiffs in February 2000, seeking a declaration that they are entitled to unpaid CSCs from fiscal year 1994 forward. Plaintiffs sought relief pursuant to the Contract Disputes Act, 41 U.S.C. §§ 601-13, after exhausting their administrative remedies. See 25 U.S.C. § 450m-1(d). The government cross-moved for summary judgment, contending that its CSC obligation was dependent upon Congress appropriating funds sufficient to pay CSCs on every self-determination contract. These competing cross-motions were stayed pending the outcome of Cherokee Nation of Oklahoma v. Thompson, 311 F.3d 1054 (10th Cir. 2002), rev’d sub nom. Cherokee Nation of Oklahoma v. Leavitt, 543 U.S. 631 (2005).

After receiving supplementary briefing on the impact of Cherokee, the district court granted the government’s motion. It held that “the United States is not liable for shortfalls in contract payments when Congress has specified an insufficient ‘not to exceed’ lump sum appropriation.” Plaintiffs timely appealed.

II

We review the grant of summary judgment de novo. Atl. Richfield Co. v. Farm Credit Bank of Wichita, 226 F.3d 1138, 1148 (10th Cir. 2000). A party is entitled to summary judgment only if, viewing the evidence in the light most favorable to the nonmoving party, the movant is entitled to judgment as a matter of law. Id.

A

In construing the statute at issue, we begin with its plain text. See Chickasaw Nation v. United States, 208 F.3d 871, 876 (10th Cir. 2000). “If the terms of the statute are clear and unambiguous, they are controlling absent rare and exceptional circumstances.” Id. “We also take into account the broader context of the statute as a whole when ascertaining the meaning of a particular provision.” Conrad v. Phone Directories Co., 585 F.3d 1376, 1381 (10th Cir. 2009) (quotation omitted). If a statute is ambiguous, we “look to traditional canons of statutory construction to inform our interpretation.” Id. (citation omitted). One such canon is particularly important in this case: In deciding between two reasonable interpretations, “the canon of construction favoring Native Americans controls over the more general rule of deference to agency interpretations of ambiguous statutes. . . . The result, then, is that if the [Act] can reasonably be construed as the Tribe would have it construed, it must be construed that way.” Ramah Navajo Chapter, 112 F.3d at 1462 (quotation and citations omitted).

This canon, grounded in the trust relationship between the federal government and Indian tribes, applies with equal force to interpretations of contracts. See Felix S. Cohen, Handbook of Federal Indian Law 224-25 (1982 ed.) (“Statutes, agreements, and executive orders dealing with Indian affairs have been construed liberally in favor of establishing Indian rights. . . . These canons play an essential role in implementing the trust relationship between the United States and Indian tribes . . . .”). The ISDA, its legislative history, and the self-determination contracts at issue confirm the applicability of this canon to the present dispute. See 25 U.S.C. § 450l(c) (terms of model agreement included in all self-determination contracts provide that “each provision of the [ISDA] and each provision of this Contract shall be liberally construed for the benefit of the Contractor” (model agreement § (a)(2))); S. Rep. No. 100-274, at 3 reprinted in 1988 U.S.C.C.A.N. at 2622 (“[F]ederal action toward Indians as expressed in treaties, agreements statutes, executive orders, and administrative regulations is construed in light of the trust responsibility.”).

B

We are presented with competing interpretations of the phrase “subject to the availability of appropriations.” The government argues that the phrase unambiguously limits the plaintiffs’ entitlement to CSC funding to a pro rata share determined by multiplying individual CSC need by the ratio of total CSC appropriations to total CSC need. Plaintiffs contend that “availability” refers to the ability of the government to pay a particular tribe’s CSCs, not its ability to pay all tribes’ CSCs. Under this construction, the phrase voids the government’s obligation on a given contract only if Congress fails to appropriate enough funds to pay that particular contract. In essence, the dispute asks whether we must take into account the Secretary’s discretionary funding of other contractors in determining whether the appropriation is “available” for a particular contract.

The terms of the ISDA and the contracts do not definitively answer this question.

The phrase “subject to the availability of appropriations” could refer, as the government urges, to whether Congress has appropriated sufficient funds to pay the aggregate of hundreds of self-determination contracts. This formulation would require a court to await an agency’s allocation of an appropriation before determining whether funds are available. However, the phrase could also refer, as the tribes contend, to a limitation on an individual contract without reference to other self-determination contracts.

Fortunately, although the statutory and contractual language does not dictate one party’s position over the other, we do not write on a blank slate.

III

We begin with three principles set down by the Supreme Court. First, a “fundamental principle of appropriations law is that where Congress merely appropriates lump-sum amounts without statutorily restricting what can be done with those funds, a clear inference arises that it does not intend to impose legally binding restrictions.” Lincoln v. Vigil, 508 U.S. 182, 192 (1993) (quotation omitted). Second, there is no merit to the “claim that, because of mutual self-awareness among tribal contractors, tribes, not the Government, should bear the risk that an unrestricted lump-sum appropriation would prove insufficient to pay all contractors.” Cherokee, 543 U.S. at 640 (citation omitted). Third, “if the amount of an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose or assumes other obligations that exhaust the funds.” Id. at 641 (quotation omitted).

A

The first principle relevant to this dispute is that of unfettered agency discretion in distributing appropriations. “A lump-sum appropriation leaves it to the recipient agency (as a matter of law, at least) to distribute the funds among some or all of the permissible objects as it sees fit.” Lincoln, 508 U.S. at 192 (quoting Int’l Union, United Auto., Aerospace & Agric. Implement Workers of Am. v. Donovan, 746 F.2d 855, 861 (D.C. Cir. 1984)). Although an agency may create ill will by ignoring congressional intent as expressed in legislative history, “[a]s long as the agency allocates funds from a lump-sum appropriation to meet permissible statutory objectives, . . . the decision to allocate funds is committed to agency discretion by law.” Lincoln, 508 U.S. at 193 (quotation omitted).

The Court’s discussion of “permissible statutory objectives,” id., implicates the concept of legal availability. In In re LTV Aerospace Corp., 55 Comp. Gen. 307 (1975), the Comptroller General explained the rule later adopted explicitly by the Lincoln Court, see 508 U.S. at 192, 193, by reference to this concept:

If the Congress desires to restrict the availability of a particular appropriation . . . , such control may be effected by limiting such items in the appropriation act itself. . . . In the absence of such limitations an agency’s lump sum appropriation is legally available to carry out the functions of the agency.

In re LTV Aerospace Corp., 55 Comp. Gen. at 319.4

The General Accounting Office describes “legal availability” as follows: [D]ecisions are often stated in terms of whether appropriated funds are or are not “legally available” for a given obligation or expenditure. This is simply another way of saying that a given item is or is not a legal expenditure. Whether appropriated funds are legally available for something depends on three things:

1. the purpose of the obligation or expenditure must be authorized;

2. the obligation must occur within the time limits applicable to the appropriation; and

3. the obligation and expenditure must be within the amounts Congress has established.

1 U.S. Gen. Accounting Office, Principles of Federal Appropriations Law 4-6 (3d ed. 2004) (the “GAO Redbook”).5

The import of Lincoln to the case at bar is that the Secretary was free to disburse the funds appropriated by Congress in any manner the Secretary chose, provided that the funds were legally available for the expenditures chosen. Thus, for example, the Secretary could have provided CSC funding on a first-come, first-served basis, covering the entire CSC need for those tribes and tribal organizations with the oldest contracts. Similarly, the Secretary could have selected those contracts that covered the most essential services and paid full CSC need to those contractors. And of course, the Secretary’s chosen course of action, disbursing a pro-rata share to all contractors, was permissible because the funds were legally available to be used on CSCs.

We recognize that a divided panel of the D.C. Circuit ruled that the ISDA requires pro-rata funding in the event of limited appropriations. See Ramah Navajo School Board v. Babbitt, 87 F.3d 1338, 1349 (D.C. Cir. 1996). Although the panel majority is somewhat opaque, it appears to hold that pro rata distribution is required because full funding of individual CSCs is mandated when Congress appropriates enough funds to cover all contracts. See id. at 1348 (“[T]he Act informs the Secretary exactly how the full funding should be allocated, and that method provides a meaningful standard by which to review the Secretary’s dissemination of the insufficient funds as well.”). We are not persuaded by this reasoning.

The ISDA text simply states that “[t]he Secretary shall add to the contract the full amount of” CSCs, and that “the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization.” 25 U.S.C. § 450j-1(b), (g). To hold that these provisions unambiguously require pro rata funding if Congress fails to provide enough money to pay all CSCs stretches the statutory text far beyond its breaking point. Although a pro rata distribution is attractive as a Solomonic solution to the problem of a statutory mandate and budgetary limitations, viewing it as a requirement runs afoul of Lincoln. See 508 U.S. at 193.

The dissent in Ramah Navajo School Board provides a far more compelling treatment of the issue. It cites Lincoln for the proposition that “requiring close adherence to a ‘formula’ is flatly improper where the Secretary has express statutory discretion over the allocation of a fund.” Ramah Navajo Sch. Bd., 87 F.3d at 1355 (Silberman, J., dissenting). Because the ISDA provides no statutory guidance in the event that appropriations fall below total CSC need, Lincoln stands for the proposition that the Secretary has “unreviewable discretion” in allocating the funds. Ramah Navajo Sch. Bd., 87 F.3d at 1355 (Silberman, J., dissenting). With respect to 25 U.S.C. § 450j-1(b), which states that the Secretary is not required to reduce funding to one tribe to pay another, the dissent points out that the Secretary necessarily takes from one tribe to pay another whenever funding falls short of total need regardless of the selected allocation method.

“Obviously, anytime the Secretary is asked to increase his proposed funding for one or more tribes out of a limited appropriation, he necessarily must reduce funding for the rest.

There is no escaping the zero sum game.” Ramah Navajo Sch. Bd., 87 F.3d at 1354 (Silberman, J., dissenting).

We agree with the Ramah Navajo School Board dissent: “the Secretary is under no legal obligation in the event of a shortfall to meet any particular ratio of distribution among the tribes.” Id. at 1353(Silberman, J., dissenting).

B

The second concept key to our disposition can be simply stated, but is too easily ignored: The tribes and tribal contractors with ISDA contracts are independent entities with independent rights and entitlements. There are over 600 tribes and tribal entities with self-determination contracts, ranging from small Alaskan villages to the immense Navajo Nation, and including tribal consortiums such as the Great Lakes Indian Fish and Wildlife Commission. They are not a single conglomerated entity simply because each lays claim to a portion of the same appropriation any more than all federal highway contractors represent a single, undifferentiated mass.

In Cherokee, the Supreme Court roundly rejected the government’s “claim that, because of mutual self-awareness among tribal contractors, tribes, not the Government, should bear the risk that an unrestricted lump-sum appropriation would prove insufficient to pay all contractors.” Cherokee, 543 U.S. at 640 (citation omitted). In rejecting this argument, the Court cited Ferris v. United States, 27 Ct. Cl. 542 (1892), a venerable Court of Claims opinion which sets forth the traditional rule regarding the effect of insufficient appropriations:

A contractor who is one of several persons to be paid out of an appropriation is not chargeable with knowledge of its administration, nor can his legal rights be affected or impaired by its maladministration or by its diversion, whether legal or illegal, to other objects. An appropriation per se merely imposes limitations upon the Government’s own agents; it is a definite amount of money intrusted to them for distribution; but its insufficiency does not pay the Government’s debts, nor cancel its obligations, nor defeat the rights of other parties.

Id. at 546 (citing Dougherty v. United States, 18 Ct. Cl. 496 (1883)). Dougherty, the case upon which Ferris relies, explained the salient distinction between multicontract appropriations and single-contract appropriations:

[W]hen one contract on its face assumes to provide for the execution of all the work authorized by an appropriation, the contractor is bound to know the amount of the appropriation, and cannot recover beyond it; but we have never held that persons contracting with the Government for partial service under general appropriations are bound to know the condition of the appropriation account at the Treasury or on the contract book of the Department. To do so might block the wheels of the Government. The statutory restraints in this respect apply to the official, but they do not affect the rights in this court of the citizen honestly contracting with the Government.

Dougherty, 18 Ct. Cl. at 503 (citation omitted).

The distinction identified in Dougherty remains valid; we now generally refer to appropriations as falling into one of two categories: line-item or lump-sum. “A lumpsum appropriation is one that is made to cover a number of specific programs, projects, or items. (The number may be as small as two.) In contrast, a line-item appropriation is available only for the specific object described.” 2 GAO Redbook at 6-5; see also id. at 6-6 (“[A] lump-sum appropriation is simply one that is available for more than one specific object.”).

It may be tempting to consider all tribes’ claims to an appropriation collectively, to view tribal self-determination contract funds as a single line-item appropriation, and to assume that because funds were insufficient to pay all tribal contractors they were unavailable to each contractor, but Cherokee, Ferris, and Dougherty prohibit such analytical shortcuts.

C

Finally, we must consider Cherokee’s guidance that “if the amount of an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose or assumes other obligations that exhaust the funds.” 543 U.S. at 641 (quotation omitted).

In Cherokee, the Court considered an issue nearly identical to that under review: the Cherokee plaintiffs sought to collect CSC payments for contracts funded by appropriations that lacked an annual cap. The government took the position that “it is legally bound by its promises if, and only if, Congress appropriated sufficient funds, and that, in this instance, Congress failed to do so.” 543 U.S. at 636. Plaintiffs countered that “as long as Congress has appropriated sufficient legally unrestricted funds to pay the contracts at issue, the Government normally cannot back out of a promise to pay on grounds of ‘insufficient appropriations.’” Id. at 637. This is true, they argued, “even if the contract uses language such as ‘subject to the availability of appropriations,’ and even if an agency’s total lump-sum appropriation is insufficient to pay all the contracts the agency has made.” Id.

The Court agreed with plaintiffs, quoting the Ferris rule. Cherokee, 543 U.S. at 637-38 (quoting Ferris, 27 Ct. Cl. at 546). It noted that the ISDA “reflects a congressional concern with Government’s past failure adequately to reimburse tribes’ indirect administrative costs and a congressional decision to require payment of those costs in the future.” Cherokee, 543 U.S. at 639. Turning to the “subject to the availability of appropriations” language, the Court stated:

Language of this kind is often used with respect to Government contracts. This kind of language normally makes clear that an agency and a contracting party can negotiate a contract prior to the beginning of a fiscal year but that the contract will not become binding unless and until Congress appropriates funds for that year. It also makes clear that a Government contracting officer lacks any special statutory authority needed to bind the Government without regard to the availability of appropriations.

Id. at 643 (citations omitted).

Relying on Ferris, the Court held that the “subject to the availability of appropriations” language did not help the government “[s]ince congress appropriated adequate unrestricted funds here.” Cherokee, 543 U.S. at 643. It rejected the government’s argument that appropriations were “unavailable to pay contract support costs because the Government had to use those funds to satisfy . . . the costs of inherent federal functions, such as the cost of running the Indian Health Service’s central Washington office.” Id. at 641-42 (quotation omitted). “This argument cannot help the Government,” the Court determined, “for it amounts to no more than a claim that the agency has allocated the funds to another purpose, albeit potentially a very important purpose.” Id. at 642.

Cherokee accordingly held that an agency’s decision to allocate legally available funds to some other permissible purpose does not render an appropriation unavailable with respect to an ISDA contract.

IV

In light of the foregoing principles, there are two potential interpretations of the effect of the “subject to the availability of appropriations” proviso. The first option would be to hold that funds are unavailable to an individual ISDA contractor because the Secretary spent to the CSC cap. In other words, the availability of appropriations would be determined after the Secretary, under his discretion, allocated CSC appropriations, and thus availability would turn on the Secretary’s decisions. Under this interpretation, as long as the Secretary spends to the CSC cap, the Secretary may determine whether and to what extent the appropriation is available for each individual contractor.

Our second option would be to hold that the availability of appropriations to fund a specific contract must be determined without reference to the Secretary’s discretionary allocation. If an appropriation is legally available to fund a particular contract, then the “subject to the availability of appropriations” condition is satisfied with respect to that contract. On this reading, each tribe is bound only by congressional funding choices as to its contract, not by the Secretary’s allocation choices.

We conclude that the latter interpretation is reasonable and most consistent with Cherokee. A The appropriations at issue in Cherokee and those under consideration in this case share important characteristics. First, they are lump-sum appropriations because they were “made to cover a number of specific programs, projects, or items.” 2 GAO Redbook at 6-5. As the GAO Redbook discusses, the Comptroller General has applied this interpretation of “lump-sum” even when an appropriation covers only two, closelyrelated items.6 The key legal principle applicable to lump-sum appropriations is that “as long as the agency allocates funds from a lump-sum appropriation to meet permissible statutory objectives,” federal law “gives the courts no leave to intrude. To that extent, the decision to allocate funds is committed to agency discretion by law.” Lincoln, 508 U.S. at 193 (quotations and alteration omitted). In Cherokee, the lump-sum appropriation included the entire budget for the Department of the Interior; in this case, it includes the CSCs for more than 600 contracts.

Second, although the appropriations under consideration in this case explicitly cap a category of spending (CSCs), the appropriations at issue in Cherokee did the same. Unlike the “not to exceed” language regarding CSCs, e.g., tit. I, 108 Stat. at 2511, the appropriations considered in Cherokee provided that a certain amount was appropriated “[f]or expenses necessary to carry out” various programs, e.g., tit. II, 107 Stat. at 1408. But in both instances, the legal effect of the language is to cap appropriations for the authorized expenditures at a certain level. “Words like ‘not more than’ or ‘not to exceed’ are not the only ways to establish a maximum limitation. If the appropriation includes a specific amount for a particular object (such as ‘for renovation of office space, $100,000’), then the appropriation establishes a maximum that may not be exceeded.” 2 GAO Redbook 6-29 (citing 36 Comp. Gen. 526 (1957); 19 Comp. Gen. 892 (1940); 16 Comp. Gen. 282 (1936)).

Third, with respect to the availability of the appropriations, the government argues as it did in Cherokee that the appropriation is not available because the funds were exhausted by other objects for which the appropriation was legally available. In Cherokee the government claimed that it could not pay full CSC need to the Shoshone- Paiute and Cherokee Nation because “the costs of inherent federal functions, such as the cost of running the Indian Health Service’s central Washington office,” 543 U.S. at 641- 42 (quotation omitted), had consumed the appropriation. In the present case, the government contends it cannot pay full CSC need to Ramah, Oglala, and Pueblo of Zuni because CSC payments to other tribes have used up the entire appropriation.

But the Supreme Court rejected this argument in Cherokee, deeming the government’s position “no more than a claim that the agency has allocated the funds to another purpose, albeit potentially a very important purpose.” Id. at 642. As the Court made clear, “if the amount of an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose or assumes other obligations that exhaust the funds.” Id. at 641 (quotation omitted).

The government does not advance a compelling argument suggesting the result in this case must be different. It notes that Congress capped total CSC spending, but this does not explain why Ramah, Oglala, Pueblo of Zuni, or any one contractor could not be paid full CSC need. In Cherokee, the Court rejected the argument that the Secretary’s discretionary allocation of funding for objects for which an appropriation was legally available rendered the appropriation unavailable for other objects. See 543 U.S. at 641.

Yet that is precisely the argument advanced by the government. In both instances, the government claims that an appropriation is unavailable for a particular plaintiff’s contract because the Secretary used the funds on other permissible expenditures.7 The other expenditures at issue in Ramah were less similar to the plaintiffs’ contracts than the other expenditures in this case. But nothing in Cherokee suggests that the similarity between two objects for which an appropriation is legally available controls the issue under consideration, nor do we see a basis in logic for treating such similarity as dispositive.8

The government focuses on the Cherokee Court’s use of the term “unrestricted appropriation,” but we read this phrase as referring to restrictions that would render funds legally unavailable to pay the plaintiff’s specific contracts. In this case, as in Cherokee, there is no statutory restriction that would preclude the Secretary from using appropriated funds to pay full CSC need to the individual contractors bringing suit.

The government also cites the ISDA’s language that “the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under this [Act].” § 450j-1(b). But as discussed in Section III.A, supra, the Secretary always reduces funding from one tribe to pay another when appropriations fall short of total CSC need. Under the present pro rata system, each tribe’s CSC funding is reduced by a certain percentage and made available to other tribes. The appropriations acts under consideration plainly required such reductions regardless of the discretionary decisions made by the Secretary. “There is no escaping the zero sum game.” Ramah Navajo Sch. Bd., 87 F.3d at 1354 (Silberman, J., dissenting).9

At base, the government’s argument rests on an improper conflation of over 600 tribes and tribal contractors into one amalgamated contractor. For example, it argues that “in the face of a congressionally-capped appropriation, the agency simply could not lawfully pay plaintiffs the full amount of their CSCs.” But this is incorrect. The Secretary possessed the discretion to pay any individual plaintiffs full CSC need. For example, in fiscal year 1998, Congress appropriated “not to exceed $105,829,000” for CSCs. Tit. I, 111 Stat. at 1554. The largest individual CSC entitlement that year was less than $14 million, and the second largest was under $4 million. It appears the government is relying on the fact that the appropriations were insufficient to pay all contractors, but as Cherokee held, there is no merit to the “claim that, because of mutual self-awareness among tribal contractors, tribes, not the Government, should bear the risk that an unrestricted lump-sum appropriation would prove insufficient to pay all contractors.” 543 U.S. at 640 (citation omitted).

Ferris and Dougherty provide a bright-line formula that avoids uncertainty in government contracting: If more than one contractor is covered by an appropriation, the failure to appropriate funds sufficient to pay all such contractors does not relieve the government of liability. As Dougherty held, determining whether liability attaches based on such unfettered discretion in the disbursing agent sows uncertainty among contractors that could “block the wheels of the Government.” 18 Ct. Cl. at 503. Instead of considering the discretionary actions of the disbursing agency, the availability of appropriations is determined by congressional action. As the Supreme Court explained in Cherokee, by signing contracts “subject to the availability of appropriations,” the tribes agreed “that the contract will not become binding unless and until Congress appropriates funds for that year.” 543 U.S. at 643 (emphasis added). In other words, the tribes agreed to be bound by congressional funding choices. But government contractors do not agree to be bound by the allocation choices of the disbursing agency or the contracts formed with other tribes and tribal entities.

No case cited by the government contravenes the Ferris/Dougherty doctrine. Although the government relies upon several cases in which the government escaped liability, each involved a single-contract appropriation. See Sutton v. United States, 256 U.S. 575, 577-79 (1921) ($20,000 appropriation for a specific dredging project proved insufficient to pay the sole contractor); Bradley v. United States, 98 U.S. 104, 111-12 (1878) (line-item appropriation to pay lease for a post office); Shipman v. United States, 18 Ct. Cl. 138, 146 (1883) (single contractor appropriation for a road project which specified “that the work to be done and the materials to be furnished under this agreement shall be restricted to the amount allowed by Congress for this purpose” (emphasis omitted)).

We are also cognizant of the close parallel between the plaintiffs’ interpretation of the phrase “subject to the availability of appropriations,” and the well-established concept of legal availability. See 1 GAO Redbook at 4-6. Legal availability does not depend on the appropriation of funds sufficient to cover all similar expenditures. The GAO Redbook does not ask whether total obligations and expenditures are within congressionally established limits, it asks whether “the obligation and expenditure” at issue is “within the amounts Congress has established.” Id. The Court’s acceptance of the Cherokee Nation’s understanding of appropriations law strongly supports this construction: “as long as Congress has appropriated sufficient legally unrestricted funds to pay the contracts at issue, the Government normally cannot back out of a promise to pay on grounds of ‘insufficient appropriations,’ even if the contract uses language such as ‘subject to the availability of appropriations.’” Cherokee, 543 U.S. at 637 (emphasis added).

Newport News illustrates this point. That case considered the amount that was legally available for construction of a certain ship, the DLGN 41. The Navy requested $152.3 million for the ship, and $92 million for a second ship, the DLGN 42. Newport News, 55 Comp. Gen. at 816. Congress appropriated the full amount, $244.3 million, without specifying the breakdown between the two ships. Id. The Navy subsequently authorized an expenditure of $30.4 for the DLGN 42. Id. Despite the apparent intent of subdividing the expenditure between the two ships, and the fact that the Navy had already authorized a portion of the funds to be used on the DLGN 42, the Comptroller General held that the entire $244.3 million was legally available for the DLGN 41. Id. at 821.

This result could not have occurred if the concept of legal availability depended on the sufficiency of an appropriation to cover all expenditures authorized by it; money spent on the DLGN 42 obviously cannot also be spent on the DLGN 41. But the federal courts have consistently guarded the integrity of the federal contracting system by holding that the insufficiency of a multi-contract appropriation to pay all contracts does not relieve the government of liability if the appropriation is sufficient to cover an individual contract. See Ferris, 27 Ct. Cl. at 546; Dougherty, 18 Ct. Cl. at 503.

B

The Federal Circuit, recently considering the same issue we confront, concluded that a plaintiff in the same position as Ramah, the Arctic Slope Native Association (“ASNA”), could not recover unpaid CSCs because the “availability of funds provision coupled with the ‘not to exceed’ language limits the Secretary’s obligation to the tribes to the appropriated amount.” Arctic Slope Native Ass’n v. Sebelius, 629 F.3d 1296 (Fed. Cir. 2010).10 The court recognized the plaintiff’s argument that the government’s liability remained “because the total appropriation is sufficient to satisfy the obligation to the [plaintiff], even though insufficient to satisfy the combined obligations to all the tribes,” id. at 1303, but as the foregoing quote demonstrates, it nevertheless analyzed the issue as the Secretary’s ability to pay all contractors, discussing only the “Secretary’s obligation to the tribes,” id. at 1304 (emphasis added).

Rather than answering the question of whether the availability of appropriations must be considered from the perspective of individual tribes and tribal contractors, the Federal Circuit’s analysis presumes from the outset that the answer is no. The court distinguishes Cherokee on the ground that “here there is a statutory cap and no ability to reallocate funds.” Arctic Slope Native Ass’n, 629 F.3d at 1304. But this assertion only begs the question. Although it is true that the Secretary cannot reprogram funds from a more general appropriation once the CSC funding cap is reached, it is equally true that the Secretary was empowered to fund all of ASNA’s CSCs by reallocating away from other contractors. In the same vein, the court concluded that the appropriations were not available to ASNA because “the appropriated amount has been paid to the tribes.” Id.

But ASNA’s full CSC need was legally available to be paid from the relevant appropriations. Whether those funds were paid to “the tribes” does not tell us whether ASNA was entitled to payment.11

The Federal Circuit briefly discusses the ISDA’s statement that “the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization.” Arctic Slope Native Ass’n, 629 F.3d at 1304 (quoting 25 U.S.C. § 450j-1(b)). But the court does not grapple with the logical impossibility of complying with this provision in the event of insufficient funding.

See Arctic Slope Native Ass’n, 629 F.3d at 1304-05. Regardless of the manner in which the Secretary chooses to allocate less than full CSC funding among the tribes and tribal contractors, some tribes will be paid at the expense of others. See Ramah Navajo Sch. Bd., 87 F.3d at 1354 (Silberman, J., dissenting). That is, the plaintiffs’ preferred allocation method and the government’s pro rata method result in exactly the same level of compliance with § 450j-1(b).

Arctic Slope Native Association also attempts to distinguish Ferris because the Ferris contract did not include a “subject to the availability of appropriations clause.” Arctic Slope Native Ass’n, 629 F.3d at 1303-04. The Federal Circuit concluded that this clause was inserted into contracts to overcome the rule of Ferris. Arctic Slope Native Ass’n, 629 F.3d at 1303. This conclusion is curious in light of the Supreme Court’s repeated citations to Ferris in Cherokee. See 543 U.S. at 637, 640, 641, 643. In particular, we cannot square the Federal Circuit’s conclusion with the Court’s reliance on both Ferris and Lincoln for the proposition that “if the amount of an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose or assumes other obligations that exhaust the funds.” Cherokee, 543 U.S. at 641 (quotation omitted, citing Lincoln, 508 U.S. at 192; Ferris, 27 Ct. Cl. at 546). By citing Lincoln’s discussion of unfettered agency discretion in allocating an appropriation among objects for which an appropriation is legally available, 508 U.S. at 192, and Ferris’s rule that a “contractor who is one of several persons to be paid out of an appropriation” cannot have “his legal rights . . . affected or impaired by its maladministration or by its diversion, whether legal or illegal, to other objects,” 27 Ct. Cl. at 546, the Court strongly suggested that the Ferris rule applies to lump sum appropriations even if the contracts for which the appropriation is legally available contain “subject to the availability of appropriations” clauses.12

Finally, we note that Arctic Slope Native Association suggested a third potential general rule regarding the effect of “subject to the availability of appropriations” clauses with respect to lump-sum appropriations. See Arctic Slope Native Ass’n, 629 F.3d at 1305 n.8. The court cites Winston Bros. Co. v. United States, 130 F. Supp. 374 (Ct. Cl. 1955), a Court of Claims trial court decision which held “where the agency authorized to spend the appropriation allocates the funds on a rational and non-discriminatory basis and they prove insufficient, the Government is not liable for harm resulting from the shortage.” Id. at 380. Under this interpretation, an agency’s disbursement of a lump-sum appropriation could render an appropriation unavailable, but only if the agency’s allocation is irrational or discriminatory. But as the Federal Circuit seemed to recognize, Arctic Slope Native Ass’n, 629 F.3d at 1305 n.8, such an interpretation is flatly inconsistent with Lincoln’s holding that an agency’s discretionary allocation of a lumpsum appropriation is non-reviewable. 508 U.S. at 191-92.

V

For the foregoing reasons, we conclude that a “subject to the availability of appropriations” clause frees the government of liability only when congressional decisions standing alone—not discretionary agency actions—make funds unavailable for a specific contract. As the Cherokee Court made clear, we must be hesitant to stray from the usual definition of “subject to the availability of appropriations” without very good reason. It is “important to provide a uniform interpretation of similar language used in comparable statutes, lest legal uncertainty undermine contractors’ confidence that they will be paid, and in turn increase the cost to the Government of purchasing goods and services.” Cherokee, 543 U.S. at 644. Nevertheless, in exceptional cases, courts have given the phrase unique import. In Blackhawk Heating & Plumbing Co. v. United States, 224 Ct. Cl. 111 (1980), the court was faced with one such “convincing argument for a special, rather than ordinary, interpretation,” Cherokee, 543 U.S. at 644.

In Blackhawk, the government and plaintiff entered into a settlement agreement intended to resolve disputed claims with respect to the construction of a Veterans Administration hospital. 224 Ct. Cl. at 115-16. As is common, the government’s obligation was made “contingent upon the availability of appropriated funds from which payment in full can be made.” Id. at 118. Unlike the case at bar, however, the government presented substantial evidence regarding the negotiation of the agreement, and the parties’ understanding of specific terms. The parties and their attorneys engaged in several discussions of the above-quoted contingency, and at the execution of the settlement agreement, the government’s attorney explained that “if there were an affirmative action by the Congress that would prevent the Administrator from paying,” the government’s obligation would not attach. Id. at 120. The plaintiff shrugged and signed the agreement. Id. Later, Congress did take affirmative action to prevent payment of a portion of the settlement agreement. Id. at 123. Based on the powerful parol evidence of the parties’ intent, the court interpreted the ambiguous contingency term to free the government from liability. Id. at 134.

In Arctic Slope Native Association, the Federal Circuit cited another case in which a court deviated from the traditional rule: C. H. Leavell & Co. v. United States, 530 F.2d 878 (Ct. Cl. 1976). See Arctic Slope Native Ass’n, 629 F.3d at 1303. That case considered a contract with a lengthy appropriations condition that, like Blackhawk, may have provided a reason to stray from the general rule. The contract at issue in C. H. Leavell contained a subsection (b) indicating that “[f]rom funds heretofore appropriated, the sum of $ 75,000.00 is available for payments to the Contractor.” 530 F.2d at 894. It further stated:

[if] it becomes apparent to the Contracting Officer that the balance of this allocation and any allocation for this and any subsequent fiscal years during the period of this contract is less than that required to meet all payments due and to become due the Contractor because of work performed or to be performed under this contract, the Contracting Officer may provide additional funds for such payments if there be funds available for such purpose. The Contractor will be notified in writing of any additional funds so made available. However, it is distinctly understood and agreed that the amount of funds stated in (b) above is the maximum amount the Government insures will be available during the current fiscal year and the Government is in no case liable for payments to the Contractor beyond this amount prior to having notified the Contractor in writing of any additional funds that can be made available. Accordingly, no progress schedule will be approved . . . which contemplates progress requiring funds in excess of the amounts stated to be available in (b) above for the current fiscal year and no progress schedule will be approved for any ensuing fiscal year which contemplates progress requiring funds in excess of the amount allocated by the Contracting Officer from funds subsequently made available.

Id. The C. H. Leavell contract may have conditioned the contractor’s entitlement on the discretionary decisions made by the contracting officer based on the repeated references to the officer’s allocations. In this case, the government does not point to any language suggesting the plaintiffs agreed to be bound by the Secretary’s choices.

Indeed, the government does not identify any compelling factors that would militate in favor of straying from the usual rule here. Nothing in the self-determination contracts or the AFAs that appear in the record unambiguously dictate the government’s position; they merely repeat the phrase “subject to the availability of appropriations,” or similar terms such as “subject to the availability of funding.” One provision in the 2001 AFA requires Oglala to bill the BIA in an amount discounted by the actual CSC funding rate. But this provision is nothing more than an acknowledgment that the BIA would not provide full funding in that year, not an indication that the tribes were agreeing to limit the government’s liability.13

The Ramah 2000 AFA is more illuminating. It includes an explicit acknowledgement that whether the tribe would receive funding for prior years’ shortfalls was an open question. By 2000 and 2001, the Oglala and Ramah contractors knew the BIA would not pay their costs in full during the relevant fiscal year, but as a Ramah plaintiff representative explained by affidavit, her tribe “always understood that the contract amount represents an entitlement under the Self-Determination Act, even if payment is delayed until Congress makes the necessary appropriation.” Unlike the shrug of the shoulders by the contractor in Blackhawk, Ramah has been vigorously shaking its head for over a decade now.14

The government also argues that Cherokee is distinguishable from this case and a “special” reading is required because Congress indicated its intent to underfund CSCs across the board. See Cherokee, 543 U.S. at 634 (“The Government refers to legislative history, but that history shows only that Executive Branch officials would have liked to exercise discretionary authority to allocate a lump-sum appropriation too small to pay for all the contracts that the Government had entered into; the history does not show that Congress granted such authority.” (citation omitted)). The government contends that, here, the allocation of too small a lump-sum to fund all CSCs was an affirmative act by Congress indicating its intent to curtail full payment of valid CSCs. Although the legislative history suggests some congressional concern with the growth of CSCs,15 see H.R. Conf. Rep. No. 103-299, at 28, the inference drawn by the government is too weak to overcome the strong preference for giving words a consistent meaning in order to ensure stability of government contracting. See Cherokee, 543 U.S. at 644; Dougherty, 18 Ct. Cl. at 503.

This is particularly true in light of the canons discussed supra. The traditional rule is that parties are presumed to contract with knowledge of existing law. See, e.g., In re Doctors Hosp. of Hyde Park, Inc., 337 F.3d 951, 959 (7th Cir. 2003); Williams v. Stone, 109 F.3d 890, 896 (3d Cir. 1997); Storts v. Hardee’s Food Sys., Nos. 98-3285 & 98- 3320, 2000 U.S. App. LEXIS 6307, at *45 (10th Cir. Apr. 6, 2000) (unpublished); Gen. Accident Ins. Co. v. First Nat’l Bank & Trust Co. of Tulsa, Nos. 90-5259 & 91-5009, 1993 U.S. App. LEXIS 26789, at *13 (10th Cir. Oct. 12, 1993) (unpublished). The reasonableness of the expectations of the parties must be viewed in light of the trust doctrine and the canon in favor of the tribes’ construction, the Ferris rule, the traditional meaning of “legal availability,” and the Cherokee Court’s interpretation of identical language. We hold that the tribes’ interpretation of the contracts and the statute is quite reasonable.

VI

Lastly, we address the government’s appeal to the Appropriations Clause and the Anti-Deficiency Act. The Anti-Deficiency Act provides:

An officer or employee of the United States Government . . . may not—

(A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation; [or]

(B) involve [the] government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law . . . .

31 U.S.C. § 1341(a)(1). The government claims that these provisions bar the Secretary from paying total CSCs, and that they strip the United States of liability to individual contractors above the contractor’s pro rata share. We agree with the first proposition, but disagree with the second.

As to liability, the ISDA permits the Secretary to enter into self-determination contracts prior to Congress appropriating funds, although the contracts are made subject to the availability of appropriations. The statute explicitly provides that “[t]he Secretary is directed, upon the request of any Indian tribe by tribal resolution, to enter into a selfdetermination contract or contracts with a tribal organization to plan, conduct, and administer programs or portions thereof.” 25 U.S.C. § 450f(a)(1). The ISDA further states that “the provision of funds under this Act is subject to the availability of appropriations.” § 450j-1(b). The model contract portion of the ISDA, § 450l, indicates that self-determination contracts “become effective upon the date of the approval and execution by the Contractor and the Secretary,” and repeats the “[s]ubject to the availability of appropriations” language with respect to funding amount. Id. (model contract § (b)(2), (4)).

Reading these provisions together, it is clear that the Secretary is “authorized by law” to “involve [the] government in a contract or obligation for the payment of money before an appropriation is made.” 31 U.S.C. § 1341(a)(1)(B). The “subject to the availability of appropriations” language would be rendered meaningless unless the contract was signed prior to congressional appropriations. Of course, the United States’ liability is made contingent upon the availability of appropriations, but as discussed above, that condition was satisfied in each of the years at issue because Congress appropriated enough funds to pay CSCs on any individual contract. See Part IV, supra. We agree with the government that the appropriations bills prohibit the Secretary from paying the sum total of all CSCs from the agency appropriations. But the United States’ liability is not coterminous with the Secretary’s ability to pay. As explained in Dougherty, the Anti-Deficiency Act restrains “the official, but [it does] not affect the rights in this court of the citizen honestly contracting with the Government.” 18 Ct. Cl. at 503 (citing the original Anti-Deficiency Act, Rev. Stat. § 3679).

This brings us to the Appropriations Clause, which states: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” U.S. Const. art. 1, § 9, cl. 7. If the plaintiffs’ CSCs cannot be paid from the annual agency appropriations, the government argues, how can plaintiffs collect without violating the Appropriations Clause? The answer is straightforward: By recovering from the Judgment Fund established pursuant to 31 U.S.C. § 1304. See 25 U.S.C. § 450m-1(d) (Contracts Disputes Act applies to self-determination contracts); 41 U.S.C. § 612 (a) (judgments arising under Contract Disputes Act paid from Judgment Fund).

The government contends that Congress could not have intended this inefficient system of compensation. On one level, it is true that Congress likely did not intend to pay CSCs from the Judgment Fund. But we must consider the legal effect of Congress’ intentional acts, and those acts compel the result. Congress passed the ISDA, guaranteeing funding for necessary CSCs, and its appropriations resulted in an on-going breach of the ISDA’s promise. The Court in Cherokee recognized the possible remedy urged by plaintiffs, noting that agencies faced with insufficient appropriations must sometimes exhaust the appropriation and “leav[e] the contractor free to pursue appropriate legal remedies [including the Judgment Fund] arising because the Government broke its contractual promise.” 543 U.S. at 642-43 (citations omitted).16

This result leaves Congress with several options to avoid liability. See U.S. Gen. Accounting Office, Indian Self Determination Act: Shortfalls in Indian Contract Support Costs Need to be Assessed 54-63 (1999) (discussing potential congressional solutions to the CSC shortfall dilemma). Congress can revise the ISDA to remove the guarantees of full CSC funding contained in 25 U.S.C. § 450j-1(a)(1) and (g). See N.Y. Airways, Inc. v. United States, 177 Ct. Cl. 800, 808 (1966) (cited with approval in Cherokee, 543 U.S. at 642) (Congress could avoid liability caused by insufficient appropriations “by changing the substantive law under which the [contractual obligation was set], rather than by curtailing appropriations”). Alternatively, Congress could limit appropriations on a contract-by-contract basis. See Dougherty, 18 Ct. Cl. at 503 (“[W]hen one contract on its face assumes to provide for the execution of all the work authorized by an appropriation, the contractor is bound to know the amount of the appropriation, and cannot recover beyond it . . . .”). What the government cannot do is breach its contractual obligations and avoid liability based on an improper reading of the phrase “subject to the availability of appropriations.”17

* * *

See: http://www.ca10.uscourts.gov/opinions/08/08-2262.pdf

Outcome: For the foregoing reasons, we REVERSE the grant of summary judgment in favor of the government and REMAND for further proceedings consistent with this opinion. 17 Plaintiffs raise additional arguments, several of which are considered in the dissent. (See Dissenting Op. 12-15, 39-42.) Although we do not disagree with much of that discussion, we need not reach the remaining issues given our holding as to the meaning of the phrase “subject to the availability of appropriations.”

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