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Muscogee (Creek) Nation Division of Housing v. United States Department of Housing and Urban Development

October 30, 2012

MUSCOGEE (CREEK) NATION DIVISION OF HOUSING, PLAINTIFF-APPELLANT,
v.
UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT;
SHAUN DONOVAN, IN HIS OFFICIAL CAPACITY;
SANDRA HENRIQUEZ, IN HER OFFICIAL CAPACITY;
C. WAYNE SIMS, IN HIS OFFICIAL CAPACITY, DEFENDANTS-APPELLEES.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF OKLAHOMA (D.C. No. 6:10-CV-00193-JHP)

The opinion of the court was delivered by: McKAY, Circuit Judge.

United States Court of Appeals Tenth Circuit

PUBLISH

Elisabeth A. Shumaker Clerk of Court

Before LUCERO, McKAY, and GORSUCH, Circuit Judges.

The dispute in this case involves interest earned on block grants made to Indian tribes pursuant to the Native American Housing Assistance and Self-Determination Act of 1996, 25 U.S.C. §§ 4101-4243. Specifically, Appellant Muscogee (Creek) Nation Division of Housing challenges both a regulation placing a two-year limit on the investment of grant funds and two notices issued by the U.S. Department of Housing and Urban Development stating that any interest accrued after the expiration of this two-year period must be returned to the Department. In its complaint, the Nation sought declaratory relief invalidating the regulation and notices as well as an injunction to prevent HUD from recouping interest earned on grant funds. The Nation also sought recoupment of the approximately $1.3 million of earned interest it wired to HUD after HUD sent a letter threatening an enforcement action based on the Nation's investment of grant funds for longer than two years. The district court dismissed the complaint, holding that HUD's sovereign immunity was not waived by the Administrative Procedures Act and, in the alternative, that the Nation had failed to state a claim on which relief could be granted because HUD's interpretation of the statute was permissible. The Nation challenges these conclusions on appeal.

BACKGROUND

Congress enacted the Native American Housing Assistance and Self-Determination Act of 1996 in order to "help[] tribes and their members to improve their housing conditions and socioeconomic status." 25 U.S.C. § 4101(5). Under NAHASDA, tribes can receive funding through Indian housing block grants. These funds must be used "for affordable housing activities" as defined by the statute. 25 U.S.C. § 4111(g). As pertinent here, the statute permits a grant recipient to "invest grant amounts for the purposes of carrying out affordable housing activities in investment securities and other obligations as approved by the Secretary." 25 U.S.C. § 4134(b). The Secretary referred to in this statute is the Secretary of the Department of Housing and Urban Development, which is the agency responsible for administering NAHASDA. See 25 U.S.C. § 4103(20).

NAHASDA requires regulations implementing its provisions to be adopted pursuant to a negotiated rulemaking process. 25 U.S.C. § 4116(b)(2). Accordingly, a committee including HUD officials and tribal representatives prepared a comprehensive set of regulations, finalized in 1998. One of these regulations, 24 C.F.R. § 1000.58, sets limitations on investments of Indian housing block grant funds. After explaining the requirements for a tribe to obtain authorization to invest grant funds, defining the types of permitted investments, and setting the amount of a grant that may be invested, the regulation provides that "[i]nvestments under this section may be for a period no longer than two years," 24 C.F.R. § 1000.58(g).

In 1999, HUD issued a notice regarding administrative requirements for investing Indian housing block grant funds. Inter alia, this notice stated that "[i]nvestments may be for a period no longer than two years" and that "[t]he recipient shall maintain a schedule evidencing that the proposed investments will mature on the approximate dates the funds will be needed and that investment maturity dates do not exceed two years." (Appellant's App. at 71-72.) From 2000 through 2004, HUD issued a notice each year that simply reissued and extended the 1999 notice. In 2007, HUD issued a new notice regarding administrative requirements for investing grant funds. This notice elaborated on the twoyear limitation, stating in part:

Investments may be for a period no longer than 2 years. The 2-year period starts on the date the recipient draws down funds for investment purposes. The 2-year requirement is the maximum period of time that any amount drawn down for investment can be invested before disbursement on an affordable housing activity.

Prior to drawing down funds for investment purposes, the recipient should do an analysis of anticipated cash needs for this 2-year period, and identify those acceptable investment options or instruments with varying dates of maturity (shorter and longer term) within the projected 2-year period. . .

When an investment instrument matures, the funds made available should be expended for an affordable housing activity. Disbursement for this purpose means actual expenditure, not just the obligation of funds. If the funds are not needed for an activity at that time, the funds could be reinvested as long as on the 2-year anniversary of the drawdown from [the tribe's Line of Control Credit System account], all funds drawn down for investment purposes have been disbursed for affordable housing activities. Any invested funds not expended on affordable housing activities by the 2- year anniversary would have to be returned to LOCCS by the recipient. Any interest accrued prior the expiration of the 2-year period is program income. ...


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