8th Circuit rejects tribal school funding appeal

Summary

• 8th Circuit affirms dismissal of Lower Brule Sioux Tribe claims
• Tribe sued Department of Interior and Bureau of Indian Affairs
• Claims involved over $3 million in disallowed tribal school costs
• Senior Circuit Judge Duane Benton authored opinion

The U.S. Department of the Interior and the Bureau of Indian Affairs were entitled to summary judgment and dismissal of the complaint filed by the Lower Brule Sioux Tribe seeking to enjoin collection of the Tribe’s alleged debts and recover an alleged overcollection, the 8th U.S. Circuit Court of Appeals ruled on July 9.

Pursuant to the Tribally Controlled Schools Act (TCSA), the Tribe contracts with the federal government to fund tribal schools. Under the Indian Self-Determination and Education Assistance Act (ISDEAA), the Tribe must submit a yearly audit of its expenditures and if any costs are disallowed, the Department of Interior seeks reimbursement.

From 2012 to 2019, the Tribe used some of the TCSA money to fund tribal operations that were unrelated to tribal schools. In 2019, the government issued a report claiming the Tribe owed over $3 million in disallowed costs.

The Tribe did not object or appeal and the government began to recover the deficit by offsetting other funds the Tribe would have received.

Challenging the offsets, the Tribe sued the Department of Interior, the Bureau of Indian Affairs (BIA) and several officials in 2021, seeking to enjoin collection of the Tribe’s alleged debts from fiscal years 2016 and 2017 and declaring the government’s actions to be arbitrary, capricious and contrary to law.

The defendants moved to dismiss, and the district court granted the motion, finding the claims untimely. It did allow the Tribe to amend its complaint to assert one claim for overcollection.

When the government moved for summary judgment on the overcollection claim, the district court granted the motion.

The Tribe appealed both the dismissal of the original complaint and the grant of summary judgment.

Senior Circuit Duane Benton affirmed, joined by Circuit Judge Lavenski R. Smith and Circuit Judge David R. Stras.

The Tribe argued that the district court erred in dismissing the claims in its original complaint because they were not time-barred. According to the Tribe, the BIA’s decision letters disallowing questioned costs for the various fiscal years were defective because the BIA did not properly advise the Tribe of its rights, suspending the running of the limitations period.

“Unfortunately, the Tribe did not raise this argument until this appeal,” the court wrote. “The Tribe never argued before the district court that the cover letters were defective, nor did it challenge their content, sufficiency or legal adequacy in opposing the government’s motions to dismiss, or in its motion for summary judgment.”

Courts will not consider an argument raised for the first time on appeal, with exceptions only where the newly raised argument presents a purely legal issue requiring no additional factual development or where failure to consider it would result in manifest injustice. Neither exception applied, the court said.

The Tribe also took the position that the BIA’s reconsideration of the FY 2016 report suspended the finality of its decision. But this statement was made without any legal analysis or authority, the court pointed out, and the issue was not discussed by the district court.

In addition, the Tribe told the court that its claims were meritorious because the revenue deficits should not have been disallowed. The deficits were caused by delays in the Tribe’s receipt of ISDEAA and other funds, the Tribe explained, and when it received the delayed funds, it replenished the TCSA deferred revenue.

But an internal BIA memo from 20216 essentially ended this practice, opining that deferred revenue must be maintained in cash or short-term investments.

The Tribe argued that it did not receive notice of this memo until 2021, which led to the continued deferred revenue deficits.

“However, this court agrees with the district court that the deadline to file an action under ISDEAA and CDA is not related to the date that an internal memo is disclosed,” the court said. “Instead, the deadline to file is fixed by the date of the government’s final decision. The Tribe failed to appeal the final decision, which became final and fully collectible. The district court correctly concluded that it lacked subject matter jurisdiction over the Tribe’s claim.”

Finally, the Tribe asserted that the government failed to provide the remedial and technical assistance mandated in the ISDEAA and TCSA.

“But Congress has not required that the Secretary provide technical assistance after a contract or grant is awarded, including in post-contract disputes by ISDEAA contractors or TSCA grantees,” the court said. “With only a conclusory statement that the district court erred in its ruling on the technical assistance claim, the Tribe provides no basis to reverse. The Tribe also fails to demonstrate injury from the alleged lack of technical assistance.”

As for the summary judgment decision, the court rejected the Tribe’s argument that its deferred revenue deficit decreased substantially between the submission of the FY 2017 and FY 2020 audits due to the Tribe replenishing the TCSA account, and that the BIA collected over $2 million more than the actual amount of its deferred revenue deficit.

“The Tribe has offered no evidence or legal analysis in its appeal to supports its conclusory statements,” the court wrote. “The Tribe justifies its overcollection claim by arguing it should be able to adjust FY 2017 debt on a running basis, using ‘prior period adjustments’ based on deferred revenue balances reported in subsequent years’ financial statements. This is untenable. The CDA does not allow the Tribe to unilaterally change the final decision of the BIA, including the amount owed.”

If the court adopted the Tribe’s analysis, it would negate the statutorily mandated audit review process and there would be no finality, “with a never-ending cycle requiring the Department to revisit prior years’ findings and disallowed costs. It would allow a Tribe to continuously adjust its deferred revenue balances in the subsequent years’ audits and nullify any Findings and Determinations.”

The Tribe’s overcollection allegation failed to properly challenge the government’s financial records and the Tribe’s calculations of “prior period adjustments” could not overcome the final decision, the court concluded, affirming summary judgment for the government.

Yvette K. Lafrentz of the U.S. Attorney’s Office for the District of South Dakota represented the government. The Office did not respond to a request for comment.

Neither did St. Louis attorney Steven J. Gunn, who represented the Tribe.

The case is Lower Brule Sioux Tribe v. U.S. Department of the Interior, No. 25-2375.