Fort Belknap Housing Dept., et al v. Office of Public and Indian, et al
Filing
FILED OPINION (A. WALLACE TASHIMA, RICHARD R. CLIFTON and CARLOS T. BEA) DISMISSED. Judge: CTB Authoring. FILED AND ENTERED JUDGMENT. [8735247]
Fort Belknap Housing Dept., et al v. Office of Public and Indian, et al
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FORT BELKNAP HOUSING
DEPARTMENT ; FORT BELKNAP
INDIAN COMMUNITY COUNCIL; FORT
BELKNAP INDIAN COMMUNITY ,
Petitioners,
No. 12-70221
OPINION
v.
OFFICE OF PUBLIC AND INDIAN
HOUSING ; U.S. DEPARTMENT OF
HOUSING AND URBAN
DEVELOPMENT ; UNITED STATES OF
AMERICA ,
Respondents.
On Petition for Review of an Order of the
Department of Housing and Urban Development
Argued and Submitted
March 7, 2013—Portland, Oregon
Filed August 8, 2013
Before: A. Wallace Tashima, Richard R. Clifton,
and Carlos T. Bea, Circuit Judges.
Opinion by Judge Bea
Dockets.Justia.com
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FORT BELKNAP V . OFFICE OF PUB. & INDIAN HOUS.
SUMMARY*
Housing / Tribal Affairs
The panel dismissed a petition for review of a decision of
the Department of Housing and Urban Development to
withhold overpayments made to the Fort Belknap Housing
Department under the federal rent-subsidy program for Indian
Tribes and Tribal Designated Housing Entities.
The panel held that because the Department of Housing
and Urban Development had taken no “action” pursuant to
25 U.S.C. § 4161(a), it lacked jurisdiction to entertain the
appeal. The panel held it lacked jurisdiction because HUD
neither alleged nor found that Fort Belknap failed to comply
substantially with the provisions of the Native American
Housing Assistance and Self Determination Act of 1996; and
because HUD did not impose the remedies listed in 25 U.S.C.
§ 4161(a)(1). The panel dismissed Fort Belknap’s petition
without reaching the merits.
COUNSEL
James L. Vogel (argued), Hardin, Montana, for Petitioners.
Stuart F. Delery (argued), Acting Assistant Attorney General,
Michael S. Raab, and Jonathan H. Levy, Attorneys, Civil
Division, United States Department of Justice, Washington,
D.C., for Respondents.
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
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OPINION
BEA, Circuit Judge:
Overview
This case involves a federal rent-subsidy program for
Indian Tribes and Tribally Designated Housing Entities
(“TDHE”) that lease housing to Indians. The program
provides per-unit payments while the Tribe or TDHE is
leasing housing units to Indians, with a view that each unit
eventually be conveyed to the Indian lessees. When the Tribe
or TDHE conveys a unit, or a unit becomes eligible to be
conveyed, unless such a conveyance is impractical, the Tribe
should no longer receive rent subsidy money for the unit.
What happened here? The Fort Belknap Housing
Department (“Fort Belknap”), a TDHE which received funds
through the program, claimed and received rent subsidy
payments for units that were no longer leased, but had been
conveyed, and for units that were eligible to be conveyed.
There were no circumstances which made the conveyance of
such units impractical. After investigation, the Department
of Housing and Urban Development (“HUD”) demanded the
return of the overpayments it had made.
Fort Belknap petitions this court for review of HUD’s
decision to withhold the amount of overpayments from future
program payments. Fort Belknap argues this court has
jurisdiction pursuant to 25 U.S.C. § 4161(d). On the merits,
it claims HUD’s actions in procuring repayment of the
overpayments were “arbitrary and capricious” and based on
a misinterpretation of various regulations. Section 4161(d),
however, allows an appeal only when HUD takes action
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pursuant to § 4161(a). Because HUD has taken no action
pursuant to § 4161(a), we lack jurisdiction to entertain this
appeal and dismiss Fort Belknap’s petition without reaching
the merits.
I. Facts
A. Statutory and Regulatory Framework
Fort Belknap operates as a TDHE in Harlem, Montana,
for the Gros Ventre and Assiniboine Tribes of the Fort
Belknap Indian Reservation. Fort Belknap is eligible to
receive funds under the Native American Housing Assistance
and Self Determination Act of 1996 (“NAHASDA” or “the
Act”), 25 U.S.C. §§ 4101–4212. The Act created the Indian
Housing Block Grant Program (“IHBG Program”), the
current mechanism for disbursing funds to eligible
beneficiaries.
The Secretary of HUD1 carries out
NAHASDA’s provisions, see id. § 4102, and allocates the
funds Congress appropriates to implement the Act, see id.
§ 4152.
The IHBG Program utilizes a formula “to allocate
equitably and fairly funds made available through
NAHASDA among eligible Indian tribes.” 24 C.F.R.
§ 1000.301, subpart D.2 This formula consists of two parts:
1
The Office of Public and Indian Housing (“PIH”), a division of HUD,
oversees allocations under the IHBG Program. PIH will be referred to as
“HUD” throughout this opinion.
2
Congress appropriates a lump amount each year to be distributed
among tribes/TDHEs. See 25 U.S.C. § 4151. Because the total amount
of money available to all tribes is fixed, the IBHG Program is a zero-sum
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“(a) Formula Current Assisted Housing Stock (‘FCAS’); and
(b) Need.” 24 C.F.R. § 1000.310. The FCAS component,
which is at issue in this case, reflects the number of lowincome housing units owned or operated by the Tribe/TDHE,
multiplied by a fixed subsidy amount. See 24 C.F.R.
§ 1000.316. As relevant here, certain lease-to-own units
(designated “Mutual Help” or “MH” units) are included in the
FCAS calculation until (1) they have been conveyed by the
Tribe/TDHE (i.e. transferred permanently to the lesseesturned-owners), or (2) they are eligible to be conveyed (i.e.
have reached their Date of Full Availability” (“DOFA”)),
unless the Tribe/TDHE proves that, for reasons beyond its
control, conveyance is impractical.
See 24 C.F.R.
§ 1000.318.
To ensure the accuracy of each year’s FCAS calculation,
HUD sends all eligible tribes/TDHEs a “Formula Response
Form” and requires them to report any changes to their
previously reported inventory of housing eligible for the
IHBG Program. See 24 C.F.R. § 1000.302 (defining
“Formula Response Form”); id. § 1000.315(a) (“A recipient
shall report changes to information related to the IHBG
formula on the Formula Response Form, including
corrections to the number of Formula Current Assisted Stock
(FCAS), during the time period required by HUD.”). HUD
uses the information gathered from these Formula Response
Forms to calculate each tribe’s/TDHE’s grant allocation. See
24 C.F.R. §§ 1000.312, 1000.314.
game: Any change in one tribe’s allocation requires an offsetting change
to other tribes’ allocations.
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B. The 2001 Letter
On August 1, 2001, HUD sent Fort Belknap a letter (“the
2001 letter”) and stated that Fort Belknap “may have
incorrectly received credit in . . . 1998, 1999, 2000, and 2001
for 171 . . . [MH] units under the [FCAS] . . . component of
the [IHBG] . . . formula.” In the letter, HUD notified Fort
Belknap that it “believe[d] [these 171 MH] Projects ha[d]
been conveyed or were eligible for conveyance prior to
October 1, 1997.” The letter stated that, if Fort Belknap
received funds for ineligible units,3 HUD would recover those
funds. It also invited Fort Belknap to “provide information
regarding the status of [the disputed] units to show that they
should be counted as FCAS.”
In response to the 2001 letter, Fort Belknap claimed
several of the disputed units should remain in FCAS because
they were occupied by “subsequent homebuyers” with new
Mutual Help and Occupancy Agreements (“MHOA”) and
different DOFAs than HUD had on record.4 HUD later
agreed that these “units should be counted as FCAS, provided
that the term of the MHOA has not expired and that the
Tribe/TDHE continue[s] to operate, maintain and collect
payments from the homebuyer for the units.” HUD stated
that it would “continue to include units with subsequent
3
HUD challenged MH units in the following nine Projects:
MT10B010001, MT10B010002, MT10B010003, MT10B010004,
MT10B010006, MT10B010007, MT10B010008, MT91B010028, and
MT91B010029.
4
A “subsequent homebuyer” is one who occupies a unit after the initial
homebuyer has vacated without obtaining ownership under his lease-toown agreement. Such an individual enters a new MHOA with the Tribe
and, as such, has a different DOFA than that of the initial homebuyer.
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homebuyers and/or DOFAs that continue to be within the 25year term of the MHOA.”
However, HUD excluded those units for which Fort
Belknap offered no explanation from the FCAS calculations
for fiscal years 1998, 1999, 2000, and 2001 and found that
Fort Belknap had been overpaid by $330,524 during that
period. By November 26, 2002, HUD and Fort Belknap had
agreed that this amount would be repaid in roughly equal
amounts over a five-year period.5
C. The 2005 Letter
On March 2, 2005, HUD sent Fort Belknap a letter (“the
2005 letter”) very similar to the 2001 letter. Again, HUD
challenged the eligibility for payment of designated units,6
again relying on 24 C.F.R. § 1000.318(a). This time,
however, HUD asked for specific information with respect to
the disputed units. In particular, HUD asked Fort Belknap to
provide “(1) [t]he date each unit became conveyance
eligible[, and] (2) [t]he date each unit conveyed.” It
continued: “If units have not conveyed, please provide an
explanation for the delay.
If there are subsequent
homebuyers, please provide a list of subsequent homebuyers,
the date the new MHOA was signed and the term of the new
MHOA.” HUD asked Fort Belknap to provide this
information within 30 days. When Fort Belknap failed to
respond within the initial 30-day period, HUD sent a followup letter and warned that it would assume Fort Belknap
5
Specifically, Fort Belknap agreed that HUD should deduct $66,104.80
from Fort Belknap’s grant allocation for five years beginning in 2003.
6
HUD challenged units in Project MT10B010010.
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agreed it had been over-funded unless it received a response
within a second 30-day period. When Fort Belknap again
failed to respond, HUD sent a another letter, stated that it
assumed Fort Belknap agreed with the substance of the 2005
letter, and subtracted $249,561 from Fort Belknap’s 2006
allocation to recover the overpayment.
D. The 2007 Letter
On September 4, 2007, HUD sent Fort Belknap another
letter (“the 2007 letter”) which again challenged the
eligibility of designated MH units based on 24 C.F.R.
§ 1000.318(a).7 HUD asked for specific information with
respect to these units (“the first inquiry”). HUD also stated
that it had reviewed its files associated with the 2001 letter
and realized it lacked certain information. In particular, for
93 of the MH units in 7 of the Projects8 challenged in the
2001 letter, HUD requested (1) a list of subsequent
homebuyers by unit number, (2) the date the new MHOA was
signed, and (3) the term of the new MHOA (“the second
inquiry”). HUD requested that Fort Belknap respond with
respect to both inquiries within 30 days. When Fort Belknap
failed to do so, HUD sent a follow-up letter, warned Fort
Belknap that a failure to respond to the first inquiry would be
taken as an agreement it had been over-funded, and reiterated
the substance of the second inquiry for Projects challenged in
the 2001 letter. Fort Belknap requested an extension, and
7
HUD challenged MH units in the following three Projects:
MT10B010011, MT10B010013, and MT10B0017.
8
HUD requested information with respect to the following seven
P r o je c ts : M T 1 0 B 0 1 0 0 0 1 , M T 1 0 B 0 1 0 0 0 2 , M T 1 0 B 0 1 0 0 0 3 ,
MT10B010004, MT10B010006, MT10B010007, MT10B010008.
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when HUD granted Fort Belknap’s request for an extension
to respond to the first inquiry, it again repeated the substance
of the second inquiry. Finally, when Fort Belknap failed to
respond to the first inquiry before the deadline, HUD sent a
fourth letter, stated its assumption that Fort Belknap agreed
it had been overpaid in the amount of $310,330, proposed a
repayment schedule, and repeated the substance of the second
inquiry for a third time.
E. Final HUD Resolution
On September 30, 2010, Fort Belknap sent HUD
information about its FCAS inventory. Specifically, the letter
identified units in various Projects which had been paid off or
conveyed. In addition to the seven Projects from the 2001
letter for which HUD had requested information in the 2007
letter, Fort Belknap included information on Projects
MT10B010010 (challenged as part of the 2005 letter),
MT10B010013 (challenged as part of the 2007 letter), and
several Projects for which there was no previous challenge.
The letter listed the DOFAs and conveyance dates for units in
these Projects. Some of the information contradicted Fort
Belknap’s responses to the 2001 letter. Fort Belknap
acknowledged that the information might require changes to
previous years’ grant allocation amounts and “formally
request[ed] the opportunity to discuss [any such] findings
and, if collection of any sum is proposed, to negotiate that
action.”
After Fort Belknap satisfied HUD’s requests for
clarification, HUD wrote, in a letter sent on December 6,
2010 (“the 2010 letter”), that Fort Belknap had been overpaid
$2,858,786 between 2000 and 2010. HUD explained that it
would recover amounts associated with units challenged in
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the 2001 letter for each fiscal year since 2000, units
challenged in the 2005 letter for each fiscal year since 2003,
units challenged in the 2007 letter for each fiscal year since
2006, and all other units for each fiscal year since 2009.
Fort Belknap filed an administrative appeal of HUD’s
decision addressed to HUD’s Deputy Assistant Secretary for
Native American Programs and argued that: (1) HUD’s
reductions exceeded the maximum reduction permitted by
24 C.F.R. § 1000.340(b),9 and (2) HUD’s action was not
timely with respect to fiscal years 2000 through 2007,
because it had not “taken action against” Fort Belknap within
three years as required by 24 C.F.R. § 1000.319(d).10 HUD
denied Fort Belknap’s appeal because (1) when the correct
amounts of Fort Belknap’s grants were used, HUD’s
reductions were within the permissible range established by
24 C.F.R. § 1000.340(b), and (2) HUD took action for
purposes of 24 C.F.R. § 1000.319(d) when it sent the 2001
letter, the 2005 letter, and the 2007 letter. Fort Belknap
sought reconsideration of this denial before the Deputy
Assistant Secretary based on its disagreement regarding
9
24 C.F.R. § 1000.340(b) provides: “If an Indian tribe is allocated less
funding under the formula than an IHA received on its behalf in FY 1996
for operating subsidy and modernization, its grant is increased to the
amount received in FY 1996 for operating subsidy and modernization. The
remaining grants are adjusted to keep the allocation within available
appropriations.” Fort Belknap argued that HUD’s reductions exceeded the
maximum amount permitted under this regulation.
10
That regulation provides: “HUD shall have 3 years from the date a
Formula Response Form is sent out to take action against any recipient
that fails to correct or make appropriate changes on that Formula
Response Form. Review of FCAS will be accomplished by HUD as a
component of A–133 audits, routine monitoring, FCAS target monitoring,
or other reviews.” 24 C.F.R. § 1000.319(d).
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whether the 2001 letter, the 2005 letter, and the 2007 letter
constituted “taking action” under 24 C.F.R. § 1000.319(d).
In a letter dated October 4, 2011 (“the final action letter”), the
Assistant Secretary denied the request for reconsideration
because:
The correct interpretation of § 1000.319(d) is
that if HUD fails to question an FCAS count
within 3 years of the Formula Response Form
at issue, HUD is precluded from seeking
repayment for overpayments resulting from
the counts reported in that Formula Response
Form. In other words, the 3-year limitation
applies to the time period before the first
action HUD takes and does not limit the time
that HUD can collect a repayment after the
issuance of the Form so long as HUD begins
the process within three years.
After HUD denied Fort Belknap’s request to waive the
repayment requirement or alter the repayment schedule, Fort
Belknap filed a petition for review with this court. It argues
that this court has jurisdiction to review HUD’s actions
pursuant to 25 U.S.C. § 4161(d) and that HUD’s actions were
“arbitrary and capricious” and/or based on a misinterpretation
of 24 C.F.R. §§ 1000.318, 1000.319.
II. Analysis
Before this court may reach the merits of Fort Belknap’s
petition, it must determine whether it has jurisdiction. See,
e.g., In re Corrinet, 645 F.3d 1141, 1143 (9th Cir. 2011) (“As
we must, we first consider whether we have jurisdiction to
hear [the] appeal.”). Fort Belknap argues that the court has
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jurisdiction pursuant to 25 U.S.C. § 4161(d). This statute
provides that “[a]ny recipient who receives notice under
subsection (a) . . . of the termination, reduction, or limitation
of payments under this chapter” may file a petition for review
of the Secretary’s action “with the United States Court of
Appeals for the circuit in which such State is located, or in
the United States Court of Appeals for the District of
Columbia.” 25 U.S.C. § 4161(d)(1)(A). As relevant here,
subsection (a) provides:
[I]f the Secretary finds after reasonable notice
and opportunity for hearing that a recipient of
assistance under this chapter has failed to
comply substantially with any provision of
this chapter, the Secretary shall—
(A) terminate payments under this chapter
to the recipient;
(B) reduce payments under this chapter to
the recipient by an amount equal to the
amount of such payments that were not
expended in accordance with this chapter;
(C) limit the availability of payments
under this chapter to programs, projects,
or activities not affected by such failure to
comply; or
(D) in the case of noncompliance
described in section 4162(b) of this title,
provide a replacement tribally designated
housing entity for the recipient, under
section 4162 of this title.
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25 U.S.C. § 4161(a)(1). In short, then, we have jurisdiction
only where HUD (1) determines, after reasonable notice and
an opportunity for hearing, that a recipient has failed to
comply substantially with NAHASDA’s provisions, and (2)
imposes one of the four statutorily required sanctions for such
failure. See id. As explained below, neither condition is met
here. Accordingly, we lack jurisdiction over Fort Belknap’s
petition and dismiss it without reaching the merits.
A. This court lacks jurisdiction because HUD neither
alleged nor found that Fort Belknap failed to comply
substantially with the provisions of NAHASDA.
This court has jurisdiction under § 4161(d) only where
HUD finds “after reasonable notice and opportunity for
hearing that a recipient of assistance . . . has failed to comply
substantially” with some provision of NAHASDA. 25 U.S.C.
§ 4161(a)(1). Here, neither the final action letter nor any
letter which preceded it alleged that Fort Belknap had failed
to comply substantially with NAHASDA. In other words,
HUD never provided “reasonable notice” of such a finding,
as would be required under § 4161(a)(1). Similarly, HUD
never found Fort Belknap to be in substantial noncompliance
with NAHASDA’s provisions. Instead, it determined that
Fort Belknap was overpaid because of its inaccurate FCAS
counts and sought to recover those amounts. Though HUD
determined that Fort Belknap failed to comply with
NAHASDA by misreporting its FCAS counts, such
misreporting is specifically excluded from the statutory
definition of “substantial noncompliance” and cannot be the
basis of jurisdiction in this court. Id. § 4161(a)(2) (providing
that “[s]ubstantial noncompliance” excludes “the failure of a
recipient to comply with the requirements . . . regarding the
reporting of low-income dwelling units . . . in itself”).
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HUD possesses the authority to recover the amounts of
overpayment Fort Belknap received independent of its power
to find substantial noncompliance under § 4161. See United
States v. Mead, 426 F.2d 118, 125 (9th Cir. 1970). In Mead,
this court held that, pursuant to the common law doctrine of
payment by mistake, the Government is entitled to recover
payments when it made those payments “under an erroneous
belief which was material to the decision to pay.” Id. There,
via the Agricultural Conservation Program, the Government
“assist[ed] farmers . . . in carrying out approved conservation
practices” by “pay[ing] to or for each farmer the lesser of a
fixed percentage of the cost price of dirt ditches or dams or a
fixed price per unit of work performed.” Id. at 120. Under
the applicable regulations, contractors were to submit
invoices with prices “based on [the] actual cost to the farmer
measured in terms of cash, enforceable promises, materials
and services rendered rather than the ‘true value’ of the
completed project.” Id. at 124. But, in Mead, the contractor
had submitted invoices with “prices” which represented the
projects’ true value, rather than their cost, and no farmer had
paid an amount equal to “the fixed percentage of the claimed
cost of the project which the farmer was to bear.” See id. at
120. The Government asserted that it had paid the contractor
based on the mistaken assumption “that it was sharing the
cost of the conservation projects with the farmers rather than
paying the entire cost (or substantially the entire cost).” Id.
The district court rejected this theory of recovery. Id. at 121.
This court reversed and held that “the government was
mistaken in its payments to the extent that the payments
exceeded the established percentage of the cost of each
project; cost being measured by the value given by each
farmer in cash, enforceable promises, services, equipment and
materials.” Id. at 124. Because the Government’s mistake
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“was material to the decision to pay, it [was] entitled to
recover the payments.” Id. On that basis, this court reversed
and remanded so that the district court could “make findings
on the issues of number and amount of payments made by
mistake.” Id.
Like the Government in Mead, HUD can recover the
amount of over payment to Fort Belknap pursuant to the
doctrine of payment by mistake. It was not required to resort
to § 4161 to recover those amounts, and it did not do so.
HUD found that Fort Belknap had been overpaid because of
HUD’s mistaken belief, based on the Formula Response
Forms Fort Belknap submitted, that various MH units had not
been conveyed and were not eligible to be conveyed but were
instead still leased out, and therefore eligible for the HUD
subsidy. HUD sought merely to recover the amounts it paid
by mistake. Because HUD never found Fort Belknap to be in
substantial noncompliance, § 4161 does not confer
jurisdiction on this court.
B. This court lacks jurisdiction because HUD did not
impose the remedies listed in § 4161(a)(1).
This court has jurisdiction under § 4161(d) only if HUD
(1) terminated payments to Fort Belknap, (2) reduced
payments to Fort Belknap “by an amount equal to the amount
of such payments that were not expended in accordance with
this chapter,” (3) limited the availability of payments “to
programs, projects, or activities not affected by such failure
to comply,” or (4) provided a replacement tribally designated
housing entity. See 25 U.S.C. § 4161(a)(1)(A)–(D). Fort
Belknap argues that, in a letter dated November 14, 2011,
HUD “clearly anticipates that the monies for which their
demand has been made have been expended for units not
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otherwise eligible. . . . If the monies were still in hand, HUD
could have simply requested their return.” Thus, Fort
Belknap argues that this court has jurisdiction because HUD
imposed a remedy under § 4161(a)(1)(B) and reduced
payments “by an amount equal to the amount of such
payments that were not expended in accordance with this
chapter.” This argument is without merit.
HUD’s proposed repayment schedule was not a
determination that the disputed funds “were not expended in
accordance” with NAHASDA. In the 2010 letter, HUD asked
Fort Belknap to contact its staff “to discuss repayment
options for the over-funding received in FYs 2000 through
2010.” It continued:
Staff will work with your Tribe to find a
suitable way to structure repayment. This
may involve reducing previous and/or future
year’s funding. Should you have funds that
are not obligated, it may be beneficial to you
to reduce previous years’ grants to enable
compliance with the 2-year obligation
performance measure.
HUD repeated this invitation to discuss repayment options
when it denied Fort Belknap’s administrative appeal. HUD’s
November 14, 2011 letter stated that HUD would “extend the
time for the Tribe to establish a repayment plan . . . . If a
repayment plan is not established in this timeframe, HUD will
deduct the funding for ineligible units over a five-year period
beginning in FY 2012 through FY 2016.” Thus, the proposed
repayment plan should be read as the option most convenient
to HUD’s collection efforts; it had nothing to do with HUD’s
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beliefs as to whether and how the funds in question had been
expended by Fort Belknap.
HUD never alleged nor found that any funds “were not
expended in accordance with this chapter.” 25 U.S.C.
§ 4161(a)(1)(B) (emphasis added). Instead, it found that Fort
Belknap “incorrectly received funding” for ineligible units.
Because HUD’s remedy (i.e. the repayment of funds received
in error) was not among those remedies listed in 25 U.S.C.
§ 4161(a)(1), this court lacks jurisdiction.11
III. Conclusion
For these reasons, Fort Belknap’s petition for review is
DISMISSED.
11
At oral argument, HUD’s counsel suggested that Fort Belknap could
raise its claims in the appropriate district court. W e do not decide whether
any other court has jurisdiction, as that issue is not before us, but we note
that our holding does not necessarily mean Fort Belknap is without
judicial recourse.
Page: 17 of 17
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